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




 
           ELECTRICITY PRICES AND SALMON: FINDING A BALANCE

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

                        OVERSIGHT FIELD HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

               Friday, July 7, 2006, in Pasco, Washington

                               __________

                           Serial No. 109-58

                               __________

           Printed for the use of the Committee on Resources



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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                                 ______

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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
                                 ------                                

                    SUBCOMMITTEE ON WATER AND POWER

               GEORGE P. RADANOVICH, California, Chairman
        GRACE F. NAPOLITANO, California, Ranking Democrat Member

Ken Calvert, California              Raul M. Grijalva, Arizona
Barbara Cubin, Wyoming               Jim Costa, California
Greg Walden, Oregon                  George Miller, California
Thomas G. Tancredo, Colorado         Mark Udall, Colorado
J.D. Hayworth, Arizona               Dennis A. Cardoza, California
Stevan Pearce, New Mexico            Vacancy
Cathy McMorris, Washington           Vacancy
  Vice Chair                         Nick J. Rahall II, West Virginia, 
Louie Gohmert, Texas                     ex officio
Vacancy
Richard W. Pombo, California, ex 
    officio


                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on Friday, July 7, 2006.............................     1

Statement of Members:
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................     5
        Prepared statement of....................................     6
    McMorris, Hon. Cathy, a Representative in Congress from the 
      State of Washington........................................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Chandler, Gary, Vice President of Governmental Affairs, 
      Association of Washington Business, Olympia, Washington....    73
        Prepared statement of....................................    74
    Cooper, Scott, Director, Parish Social Ministries, Catholic 
      Charities, Spokane Parish, Spokane, Washington.............    14
        Prepared statement of....................................    16
    Durham-Aguilera, Karen, Director of Programs, Northwestern 
      Division, U.S. Army Corps of Engineers.....................    33
        Prepared statement of....................................    34
    Espinoza, Ricardo, President of the Board of Directors, Pasco 
      School District, Pasco, Washington.........................    11
        Prepared statement of....................................    12
    Flores, Terry G., Executive Director, Northwest 
      RiverPartners, Portland, Oregon............................    44
        Prepared statement of....................................    46
    Hirsh, Nancy, Policy Director, Northwest Energy Coalition, 
      Seattle, Washington........................................    38
        Prepared statement of....................................    40
    Miles, Hon. Rebecca, Commissioner, Columbia River Inter-
      Tribal Fish Commission, Portland, Oregon...................    48
        Prepared statement of....................................    50
    Morrison, Hon. Sid, Chairman of the Board, Energy Northwest, 
      and Chairman of the Board, Yakima Basin Storage Alliance, 
      Zillah, Washington.........................................    17
        Prepared statement of....................................    19
    Reimann, Ron, Owner/Operator, T & R Farms, Inc., Pasco, 
      Washington.................................................     8
        Prepared statement of....................................     9
    Voigt, Chris, Executive Director, Washington State Potato 
      Commission, on behalf of the Family Farm Alliance, Moses 
      Lake, Washington...........................................    67
        Prepared statement of....................................    69
    Wright, Stephen J., Administrator and Chief Executive 
      Officer, Bonneville Power Administration, U.S. Department 
      of Energy, Portland, Oregon................................    21
        Prepared statement of....................................    23

Additional materials supplied:
    Dawsey, Charles L., General Manager-EVP, Benton Rural 
      Electric Association, Statement submitted for the record...    83


    OVERSIGHT HEARING ON ``ELECTRICITY PRICES AND SALMON: FINDING A 
                               BALANCE''

                              ----------                              


                          Friday, July 7, 2006

                     U.S. House of Representatives

                    Subcommittee on Water and Power

                         Committee on Resources

                           Pasco, Washington

                              ----------                              

    The Subcommittee met, pursuant to call, at 9:00 a.m., at 
the Gjerde Multipurpose Room, Columbia Basin College, 2600 
North 20th Avenue, Pasco, Washington, Hon. Cathy McMorris [Vice 
Chairman of the Subcommittee] presiding.
    Present: Representatives McMorris and Hastings.

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

    Miss McMorris. The Subcommittee on Water and Power will 
come to order. I thank everyone for coming and being a part of 
this very timely and important Congressional hearing. I'd like 
to welcome everyone to today's hearing.
    I represent the neighboring 5th District in Eastern 
Washington and serve as the Vice Chair of the House Water and 
Power Subcommittee, and I want to thank my colleague, Doc 
Hastings, for having me in his hometown.
    Before we go to the opening statements and testimony, I 
would like to turn to Representative Hastings to introduce some 
of his citizens who will begin the hearing with the Invocation, 
Presentation of the Colors, and the Pledge of Allegiance.
    [Invocation, Presentation of the Colors, and the Pledge of 
Allegiance.]
    Miss McMorris. This field hearing is about finding a 
balance between providing reliable and affordable electricity 
for our consumers, while protecting endangered salmon. As we 
sit here at the confluence of the Columbia and Snake River 
systems, we admire the natural beauty of our Pacific Northwest 
river systems.
    These rivers have a major economic purpose as well. They 
serve as the lifeblood of our economy, our customs, our 
cultures, and our traditions. The multipurpose dams and 
reservoirs on the rivers not only helped to win World War II 
but, to this day, provide many benefits to those of us in the 
Pacific Northwest. By using and protecting our natural 
resources, people throughout the Northwest have a reliable and 
renewable source of energy, while also being able to enjoy our 
resources, as people have done for hundreds of years.
    Low-cost, renewable hydropower forms the backbone of our 
regional electricity supply. The promise of this long-term, 
low-cost hydropower made the Pacific Northwest what it is 
today. Yet this promise is being undermined by constant 
litigation, activists who want to tear down the dams and our 
hydropower systems, as well as bureaucrats 2600 miles away in 
Washington, D.C., who want to balance the Federal budget on the 
backs of ratepayers. I think there are other ways to balance 
this budget, while still providing our customers with the 
energy they rely upon.
    Oftentimes, the Endangered Species Act is being used as a 
tool to drive up cost for our electricity consumers. No one 
disagrees with protecting truly endangered species, but the ESA 
has been misinterpreted and stretched to put species before 
people. Just ask the hardworking farmers of Klamath Falls, 
Oregon, who were basically forced out of business when the 
Federal Government shut off their water to protect endangered 
suckerfish, only to have an independent science panel later say 
the water shut-off may not have been necessary.
    The Federal Government has spent billions of dollars, 
reduced water deliveries to communities, made electricity more 
expensive and, yet, the ESA still has a 1 percent rate of 
success at best. In the world I grew up in, a 1 percent rate 
does not meet the definition of success. We're trying to change 
the way ESA is being carried out through a reasonable approach 
that makes this process fair for all involved. We have passed a 
reform bill in the House and are waiting for the Senate to act.
    Meanwhile, the ESA is upfront and personal here in Eastern 
Washington, and our farmers and electricity consumers are 
paying for it. Opinions coming from a Federal judge have 
severely curtailed our ability to appropriately manage our 
hydropower and natural resources. According to the Washington 
Post, Judge Redden's 2004 summer spill amounted to spending 
$3.85 million for each protected Chinook salmon. That's an 
expensive salmon. And, unfortunately, these costs are passed on 
to electricity ratepayers. Judicial activism needs to stop, and 
unbiased jurisprudence must take its place.
    While the ESA has had its own impact on power within our 
region, the Bonneville Power Administration, BPA, manages and 
provides much of that power. Recent Administration budget 
proposals regarding secondary revenue have come dangerously 
close to increasing our power rates even more. This proposal 
has been temporarily blocked by recent legislation enacted by 
Congress. Representative Hastings, myself, and a bipartisan 
group of members throughout the Northwest have and will 
continue to fight this proposal.
    No one can deny that the ESA has impacted recent Bonneville 
power rates. Yet many consumers don't know how much they pay 
for fish protection, why they pay, and whether they're paying 
for them at all. A May 2005 poll found that 70 percent of 
respondents either didn't know how much they paid for salmon 
recovery or believed that less than 5 percent of their monthly 
bills goes 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 there's a 
disconnect between what consumers know or have access to versus 
what's real. Consumers need and deserve open access to 
information on how these figures are affecting their 
pocketbooks.
    The Endangered Species Compliance and Transparency Act, 
H.R. 4857, which I've introduced, would require BPA 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. 
The bill simply gives customers a right to know how much of the 
Federal Government's ESA costs are being passed on to them.
    In my district, Inland Power and Light already provides 
customers on their monthly energy bill all the costs that are 
passed on by BPA relating to the Endangered Species Act. This 
is the kind of reporting we need and that every customer has a 
right to know. Many customers at Inland were surprised at the 
costs they pay each month.
    And once they receive this information, they can make more 
informed decisions. They may ask whether the salmon recovery 
program is working or ask themselves if government can do 
better. And those are the questions, exactly, why many are 
afraid of this debate, but that's the question that we'd like 
to have debated today.
    I hope the Federal witnesses can tell us how they measure 
success in salmon recovery or explain what standards and 
benchmarks are being used to show progress.
    I plan on using today's hearing as a basis to ask the 
Government Accountability Office to answer these questions. Our 
ratepayers and endangered salmon deserve those answers so that 
the ESA can be made to work for both species and people.
    We are privileged to have before us today a host of ``on-
the-ground'' experts who know what rising electricity bills 
mean to them and to our economy, and I look forward to today's 
hearing.
    [The prepared statement of Ms. McMorris follows:]

        Statement of The Honorable Cathy McMorris, Vice Chair, 
                    Subcommittee on Water and Power

    I would like to welcome everyone to today's hearing. I represent 
the neighboring 5th District in Eastern Washington and serve as Vice 
Chair of the House Water and Power Subcommittee. I want to thank my 
colleague, Doc Hastings, for having me in his hometown.
    This field hearing is about finding a balance between providing 
reliable and affordable electricity for our consumers, while protecting 
endangered salmon with a balanced and reasonable approach. As we sit 
here at the confluence of the Columbia and Snake Rivers, we admire the 
natural beauty of the Pacific Northwest's river systems. These rivers 
have a major economic purpose as well. They serve as the lifeblood of 
our economy, our customs, our cultures and our traditions. The 
multipurpose dams and reservoirs on the rivers--as envisioned by 
President Franklin Delano Roosevelt--not only helped win World War II, 
but to this day, provide many benefits to those of us in the Pacific 
Northwest. By using and protecting our natural resources, people 
throughout the Northwest have a reliable and reasonable source of 
energy while also being able to enjoy our resources, as people have 
done for hundreds of years.
    Low-cost, renewable hydropower forms the backbone of our regional 
electricity supply. The promise of this long-term, low-cost hydropower 
made the Pacific Northwest what it is today. Yet this promise is being 
undermined by constant litigation, activists who want to tear down the 
dams and our hydropower system, as well as bureaucrats 2,600 miles away 
in Washington, DC who want to balance the federal budget on the backs 
of our ratepayers. I think there are other ways to balance this budget 
while still providing our constituents the energy they rely upon.
    Oftentimes, the Endangered Species Act (ESA) is being used as a 
tool to drive up costs for our electricity consumers. No one disagrees 
with protecting truly endangered species, but the ESA has been 
misinterpreted and stretched to put species before people at any cost. 
Just ask the hardworking farmers in Klamath Falls, Oregon who were 
basically forced out of business when the federal government shut off 
their water to protect endangered suckerfish only to have an 
independent science panel later say that the water shut-off may not 
have been necessary.
    The federal government has spent billions of dollars, reduced water 
deliveries to communities, made electricity more expensive and lined 
the pockets of many lawyers, yet the ESA still has a 1% rate of success 
at best. In the world I grew up in, a 1% rate does not meet the 
definition of success. We are trying to change the way ESA is being 
carried out, through a reasonable approach that makes this process fair 
for all involved. We have passed a reform bill in the House, and are 
waiting for the Senate to act.
    Meanwhile, the ESA is upfront and personal here in Eastern 
Washington--and our farmers and electricity consumers are paying for 
it. Biological opinions coming forth from a federal district judge have 
severely curtailed our ability to appropriately manage our hydropower 
and natural resources. As this chart shows, the costs are outrageous. 
According to the Washington Post, Judge Redden's 2004 summer spill 
amounted to spending $3.85 million for each protected Chinook salmon. 
That's an expensive salmon and unfortunately, those costs are passed on 
to electricity ratepayers. Judicial activism needs to stop, and 
unbiased jurisprudence must take its place.
    While the ESA has its own impact on power within our region, the 
Bonneville Power Administration (BPA) manages and provides much of that 
power. Recent Administration budget proposals regarding secondary 
revenue have come dangerously close to increasing our power rates even 
more. This proposal has been temporarily blocked by recent legislation 
enacted by Congress. Representative Hastings, myself, and a bipartisan 
group of Members throughout the Northwest have and will continue to 
fight this proposal.
    No one can deny that the ESA has impacted recent Bonneville power 
rates. Yet, many consumers don't know how much they pay for fish 
protection, why they pay, or whether they're paying for them at all. A 
May 2005 poll 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 shows there is a disconnect between what consumers know--or 
have access to--versus what's real. Consumers need and deserve open 
access to this information, and how these factors are affecting their 
pocketbooks.
    My legislation gives consumers that access. The Endangered Species 
Compliance and Transparency Act, H.R. 4857, requires BPA 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 to them. Already in my district, Inland 
Power and Light provides customers on their monthly energy bill all the 
costs that are passed on by BPA relating to ESA costs. This is exactly 
the kind of reporting we need, and that every customer has a right to 
know. Many customers of Inland were surprised at the cost they pay each 
month, and many I have heard from have questions as to where those 
costs are coming from and what they go towards.
    Once consumers receive access to this information, they can make 
informed decisions. They may question whether the salmon recovery 
program is working or ask themselves if their government can do better. 
And those questions are exactly why many are afraid of this debate--
because it leads to questions of whether the command-and-control, 
judicially driven ESA decisions are working.
    Some of those questions will be debated today. I hope the federal 
witnesses can tell us how they measure success in salmon recovery or 
can explain what standards and benchmarks are being used to show 
progress. I plan on using today's hearing as a basis to ask the 
Government Accountability Office to help answer these questions--our 
ratepayers and endangered salmon deserve those answers so that the ESA 
can be made to work for both species and people.
    We are privileged to have before us today a host of ``on-the-
ground'' experts who know what rising electricity bills mean to them 
and to our economy. I welcome them and look forward to today's hearing.
                                 ______
                                 
    Miss McMorris. At this time I'd like to turn it over to 
Representative Hastings.

    STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Hastings. Thank you very much. I appreciate your work 
on getting this field hearing here. Cathy was a bit modest 
because she serves on that committee. And while those of us in 
the Northwest on a bipartisan basis work together a lot on this 
issue as far as electrical rates, clearly, Cathy has a big 
impact in that she serves on the committee, and that's the 
reason the field hearing is here, and I want to thank her for 
that.
    This is an issue that affects all of us in the Northwest. 
And I think it's especially significant that the Water and 
Power Subcommittee decided to come here to see what the impacts 
are.
    For more than 70 years the Federal dams on the Columbia and 
Snake River systems have been the cornerstone of our region's 
economic development. This clean and relatively inexpensive 
electricity generated by these facilities helps serve the 
elements of the aerospace, aluminum, and now information 
technology industries here in the Northwest.
    These multipurpose dams provide the water and power needed 
to run the irrigation systems that have turned this once arid 
basin into one of the country's premier centers of high value 
agriculture. The dam facility and river transportation in the 
region must export products to distant markets. In addition, 
they create new recreation opportunities and protect against 
flooding.
    These assets come with responsibilities, both financial and 
environmental. Our region repays the Federal Treasury with 
interest for the construction and maintenance of these 
facilities. Let me repeat that. You ratepayers in our region 
repay the Federal Treasury with interest for the construction 
and maintenance of these facilities. We have consistently 
repaid this debt and, in fact, we are ahead of schedule on the 
Federal debt repayment by nearly $1 billion. These are our 
dams, and the Northwest Congressional Delegation would never 
allow any outside region or administration to take the benefits 
of this system away from us.
    On the environmental side, we have made substantial 
investments, mainly paid for by ratepayers, all of you, to 
better facilitate fish passage throughout the hydrosystem and 
to greatly improve habitat. Due in part to our regional 
commitment of salmon recovery, we have witnessed near record 
salmon returns in most areas of the Columbia and the Snake 
River regions.
    For example, the number of spring and summer Chinook 
passing over Bonneville Dam this year is the sixth strongest in 
the past 20 years. We are all committed to seeing healthy 
salmon runs and meeting our obligations under the Endangered 
Species Act and our treaty obligations with Northwest Tribes. 
And we can do this without the extreme step of tearing out the 
dams.
    I will restate for the record, unequivocally, that those 
dams are not going to go anywhere as long as I have something 
to say about that in Congress. And I know I'm not alone in that 
regard.
    Unfortunately, over the past ten years this has 
increasingly become a litigation-driven process. We now have an 
unelected and I believe unaccountable Federal judge in Portland 
determined to run the river himself with little regard for the 
impact of his decisions on this side of the mountains.
    In a court hearing last fall, he referred to the Northwest 
irrigation, transportation and power as ``subsidies'' and gave 
great deference to proposals set forth by interests that have 
an agenda to tear out the dams. As a result of his court 
orders, a steady drip of expensive fish measures of 
questionable value flows from his courtroom directly onto the 
backs of ratepayers and river users.
    One of the most obvious and egregious examples of this is 
the summer spill program, where generators are bypassed during 
the hottest and driest part of the summer at a cost last year 
of $75 million on the theory that it aids an additional few 
dozen endangered Snake River fish.
    The question is, is spending upwards of $3.5 million per 
listed fish, while ignoring more cost-effective approaches that 
achieve the same or better results, really the most efficient 
way to recover salmon? It clearly, in my view, is not. But this 
is where we find ourselves, routinely spending nearly a billion 
dollars a year on salmon recovery in our region and, 
unfortunately, there is no end in sight.
    There are real consequences of this policy to those of us 
who pay the household electrical bill or have to manage the 
overhead costs of a small business, a farm, a school, or a 
hospital.
    The Congresswoman's proposal, which I support, would shine 
a necessary light on the reality of the increasing costs of the 
Endangered Species Act. It is time to acknowledge that we have 
long passed the point of diminishing returns with modifications 
to the hydrosystem. If we truly want to aid salmon, let's look 
at harvest policies, and utilizing hatcheries to supplement 
naturally-spawning salmon, and the ongoing unchecked predation 
of salmon by exploding populations of protected California sea 
lions and Caspian terns.
    So I look forward to hearing more from all of the witnesses 
here today on this important topic. It is important to all of 
us in the Northwest. And I want, again, to thank you for 
sharing your support of the hearing today and look forward to 
the testimony from the witnesses.
    [The prepared statement of Mr. Hastings follows:]

 Statement of The Honorable Doc Hastings, a Representative in Congress 
                      from the State of Washington

    Thank you for holding this important field hearing here in Pasco 
today. This is an issue that affects all of us in the Northwest, and I 
think it is especially significant that the Water and Power 
Subcommittee decided to come here to get input about how fish costs and 
electric rates are affecting our region directly from those who are 
most impacted.
    For more than seventy years the federal dams on the Columbia-Snake 
River system have been the cornerstone of our region's economic 
development. The clean and relatively inexpensive electricity generated 
by these facilities helped spur the development of the aerospace, 
aluminum, and now information technology industries here in the 
Northwest. These multipurpose dams provide the water and the power 
needed to run the irrigation systems that have turned this once arid 
basin into one of the country's premier centers of high-value 
agricultural production. The dams facilitate river transportation in a 
region that must export its products to distant markets. In addition 
they create new recreation opportunities and protect against flooding.
    These assets come with responsibilities, both financial and 
environmental. Our region repays the federal treasury with interest for 
the construction and maintenance of these facilities. We have 
consistently repaid this debt and, in fact, are ahead of schedule on 
federal debt repayment by nearly one billion dollars. These are our 
dams and the Northwest congressional delegation will never allow any 
outside region or any Administration to steal the benefits of this 
system from us.
    On the environmental side, we have made substantial investments--
mainly paid for by ratepayers--to better facilitate fish passage 
throughout the hydrosystem and to improve habitat. Due in part to our 
regional commitment to salmon recovery, we have witnessed near record 
salmon returns in most areas of the Columbia and Snake basins. For 
example, the number of spring and summer chinook passing over the 
Bonneville Dam this year is the sixth strongest in the past twenty 
years.
    We are all committed to seeing healthy salmon runs and meeting our 
obligations under the Endangered Species Act and our treaty obligations 
with Northwest tribes--and we can do this without the extreme step of 
tearing out dams. I will restate for the record, unequivocally, that 
those dams are never going anywhere as long I have something to say 
about it.
    Unfortunately, over the last ten years, this has increasingly 
become a litigation-driven process. We now have an unelected, and I 
believe unaccountable, federal judge in Portland who appears determined 
to run the river himself with little regard for the impacts of his 
decisions on this side of the mountains. At a court hearing last fall, 
he referred to Northwest irrigation, transportation and power as 
``subsidies'' and gave great deference to proposals set forth by 
interests that have an agenda to tear out the dams. As a result of his 
court orders, a steady drip of expensive fish measures of questionable 
value flows from his courtroom directly onto the backs of ratepayers 
and river users.
    One of the most obvious and egregious examples of this is the 
summer spill program, where the generators are bypassed during the 
hottest and driest part of the summer at a cost of seventy five million 
dollars or more on the theory that it aids an additional few dozen 
Snake River Fall Chinook. Is spending upwards of three and half million 
dollars per listed fish while ignoring more cost-effective approaches 
that achieve the same or better results really the most efficient way 
to aid the recovery of salmon? It clearly is not. But this is where we 
find ourselves today: routinely spending nearly a billion dollars a 
year on salmon recovery in our region with no end in sight.
    There are real consequences of this policy to those of us who pay 
the household electric bill, or have to manage the overhead costs of a 
small business, a farm, a school or a hospital. Congresswoman McMorris' 
proposal--which I support--would shine a necessary light on the reality 
of the increasing costs of the Endangered Species Act placed on 
Northwest ratepayers and hopefully, begin to shift the region's focus 
more to accountability on ensuring every federal and ratepayer dollar 
spent on salmon recovery is not squandered.
    It is time to acknowledge that we have long passed the point of 
diminishing returns with modifications to the hydrosystem. If we truly 
want to aid salmon, let's look at harvest policies, and utilizing 
hatcheries to supplement naturally-spawning salmon, and the ongoing 
unchecked predation of salmon by exploding populations of protected 
California sea lions and Caspian terns.
    I look forward to hearing more from all of the witness here today 
on this important topic. And thank you again for chairing this 
important hearing today.
                                 ______
                                 
    Miss McMorris. Thank you. I'd like to recognize our panel 
this morning as quite an impressive panel that's assembled and 
thank each one of you for taking time to be here.
    By way of introduction, we have Mr. Ron Reimann. He is 
Owner/Operator of T & R Farms in Pasco, Washington. Mr. Ricardo 
Espinoza, President of the Board, Pasco School District. Mr. 
Scott Cooper, Director of Parish Social Ministry, Catholic 
Charities, Spokane. The Honorable Sid Morrison, Chairman of the 
Executive Board, Energy Northwest, and Chairman of the Board, 
Yakima Basin Storage Alliance out of Zillah.
    Mr. Steven Wright, Administrator of the Bonneville Power 
Administration, Portland, Oregon. And he's accompanied by Bill 
Maslen, Manager, Fish and Wildlife, Bonneville Power 
Administration. Steve is on a very tight time schedule today, 
so I understand you're going to give your testimony and then go 
with a round of questions. OK? I appreciate that.
    Karen Durham-Aguilera, Director of Programs, Northwestern 
Division, U.S. Army Corps of Engineers. Nancy Hirsh, Policy 
Director, Northwest Energy Coalition, Seattle, Washington. 
Terry Flores, Director, Northwest RiverPartners, Portland, 
Oregon. The Honorable Rebecca Miles, Commissioner, Columbia 
River Inter-Tribal Fish Commission, Portland, Oregon. And she's 
accompanied by Mr. Ed Sheets.
    Chris Voigt, Executive Director, Washington State Potato 
Commission and member of the Family Farm Alliance out of Moses 
Lake, Washington. And Mr. Gary Chandler, Vice President of 
Government Affairs, Association of Washington Business.
    Before we get started, I need to ask you to stand for the 
oath. Please stand and raise your right hands and affirm after 
me.
    [Witnesses sworn.]
    Miss McMorris. Before the witnesses testify, I would like 
the members of the audience to know that we would welcome your 
written testimony. There's forms in the back where you can 
submit your written comments.
    Now, we've asked each of those on the panel to speak for 
five minutes, and then we'll open it up for questions. And I'll 
ask you just to pay attention to the clock here. Some suggest 
that it's very similar to a traffic light. Green means go. 
Yellow means speed up. And red means stop. The clock is here 
for you to use.
    At this time Mr. Reimann will start and share with us.

           STATEMENT OF RON REIMANN, OWNER/OPERATOR, 
              T & R FARMS, INC., PASCO, WASHINGTON

    Mr. Reimann. I'd like to thank the Congressmen for bringing 
this hearing here. It saves a trip to Washington, D.C. I'm an 
owner/operator of a family owned diversified farm on the Snake 
River. We bought our present land in '73 and planned to put 
irrigation on it in '74. We put development on hold when a 
water moratorium was put on the lower Snake River to study its 
uses. We also ran into a little animal called the Kangaroo 
Mouse and its habitat.
    In 1975 irrigation development started. Pumps, pivots, main 
line, were all paid for by T & R Farms with no use of any 
government money. We started water and power savings in '79 
using infrared photography, neutron probes. We also installed a 
variable drive pump at a river station, which was the first of 
its kind installed on either the Snake or the Columbia River. 
We installed low pressure pivots at this time.
    We use global positioning to fertilize, plant, and till our 
ground. And this equipment gives us sub-inch accuracy and saves 
up to 35 percent on fuel costs. Our entire fields are treated 
this way. We monitor soil moisture, soil nutrients, and plant 
nutrients on a bi-weekly and weekly basis. We use computers to 
control our pumping and adjust our pressure and water use that 
adjusts the total every eight minutes. We have used ethanol 
since 1985. We have developed wildlife ponds and planted trees 
and bushes to enhance the habitat. We have done this to enhance 
our farm environment.
    We have reduced our electrical power usage 46 percent per 
acre since '79, and we have reduced our water usage 33 percent 
per acre. From '75 to 2005 our electrical power rate has 
increased 281 percent. 81 percent of this has come since 2001. 
Because of this we are constantly looking at our power costs. 
And in 2006 we removed the circle and the main line that 
provides water to it. In its nine years of existence, it's 
generated $1,601,700 on land that was previously cheat grass.
    For tax purposes this land, under open spaces, was assessed 
at $1,147 an acre. It is now reverted back to ground at an 
assessed value of $8 an acre. This is money that is lost to the 
state and local government.
    Our other source of power, gas and diesel, has increased 
356 percent and 625 percent since 1975. By comparison, our 
commodities such as wheat has decreased 26 percent, potatoes 
have increased only 4.5 percent. The fact that we are still 
here is amazing to us, not to mention our banker. We have 
survived because we have become more efficient and have 
increased our crop yields.
    The Snake River is the heart and blood of our farm. We are 
truly fortunate to have a source of energy that is as efficient 
as hydropower. Would somebody in this room please tell me of 
another source of energy we have that has no emissions, no 
waste, no hazardous cleanup, a renewable source that can be 
used for recreation, food production, transportation, flood 
control, and wildlife? In this day and age we no longer can 
afford to jeopardize this amazing power source by courts and 
judges that know nothing of this great natural resource.
    Spilling water to flush fish down the river is senseless 
and environmentally unsound. We need to put some common sense 
into the Endangered Species Act. We cannot continue to leave 
families such as mine out of the equation. I am just as 
important as a fish, and I can damn well tell you that my 
three-year-old granddaughter is much more important.
    You can patch a roof using $20 bills but it's obviously too 
costly and only a temporary fix. We have to approach this 
problem practically, not just try to buy off the problem.
    The Endangered Species Act is a tool no different than a 
shovel. Put to common sense use, it can produce. But in the 
wrong hands, it can just as easily destroy. Let's put our dams 
back to use for the environment.
    And I would like to thank you and I'd like to leave you 
with four truths that after 63 years I have found to be self-
evident. First, nothing is ever as good as people say it is. 
Second, nothing is ever as bad as people say it is. Third, any 
justice that comes out of a courtroom, is an accident. And, 
fourth and last but not least, any common sense that comes from 
the government is truly a miracle.
    [The prepared statement of Mr. Reimann follows:]

               Statement of Ron Reimann, Owner/Operator, 
                  T & R Farms, Inc., Pasco, Washington

    MY NAME IS RON REIMANN, I AM ONE OF THE OWNERS OF T&R FARMS. WE ARE 
A FAMILY OWNED AND OPERATED FARM. WE ARE A DIVERSE FARMING OPERATION OF 
APPROXIMATELY 7600 ACRES OF WHICH 4600 IS IRRIGATED. OUR MAIN SOURCE OF 
WATER IS THE SNAKE RIVER.
    WE BOUGHT OUR FARM IN 1973 AND PLANNED TO PUT IRRIGATION ON IT IN 
1974. WE PUT DEVELOPMENT ON HOLD WHEN A WATER MORATORIUM WAS PUT ON THE 
LOWER SNAKE TO STUDY ITS BEST USES. WE ALSO RAN INTO A LITTLE ANIMAL 
CALLED THE KANGAROO MOUSE AND ITS HABITAT.
    1975 IRRIGATION DEVELOPMENT STARTED. PUMPS, PIVOTS AND MAINLINE 
WERE ALL PAID FOR BY T&R FARMS WITH NO USE OF ANY GOVERNMENT MONEY.
    WE STARTED WATER AND POWER SAVING METHOD IN 1979 USING AERIAL 
INFRARED PHOTOGRAPHY AND NEUTRON PROBES TO MEASURE MOISTURE CONTENT OF 
OUR SOIL. IN 1981 WE INSTALLED A 600HP VARIABLE DRIVE PUMP AT OUR RIVER 
STATION THAT WAS THE FIRST OF ITS KIND USED ON THE SNAKE OR COLUMBIA 
RIVERS. WE ALSO INSTALLED OUR FIRST LOW PRESSURE PIVOT.
    WE USE GLOBAL POSITIONING TO FERTILIZE AND TO PLANT AND TILLAGE OUR 
GROUND. THIS EQUIPMENT GIVES U.S. SUB-INCH ACCURACY AND SAVES UP TO 35% 
ON FUEL COSTS. OUR ENTIRE FIELDS ARE TREATED THIS WAY. WE MONITOR SOIL 
MOISTURE, SOIL NUTRIENTS AND PLANT NUTRIENTS ON A BI-WEEKLY AND WEEKLY 
BASIS. WE USE COMPUTERS TO CONTROL OUR PUMPING AND ADJUST OUR PRESSURE 
AND WATER USE THAT ADJUSTS EVERY 8 MINUTES. WE HAVE USED ETHANOL SINCE 
1985. WE HAVE DEVELOPED WILDLIFE PONDS AND PLANTED TREES AND BUSHES TO 
ENHANCE HABITAT. WE HAVE DONE THIS TO ENHANCE OUR FARM ENVIRONMENT.
    WE HAVE REDUCED OUR ELECTRICAL POWER USAGE 46% PER ACRE SINCE 1979 
AND WE HAVE REDUCE OUR WATER USAGE 33% PER ACRE.
    FROM 1975 TO 2005 OUR ELECTRICAL POWER RATE HAS INCREASED 280.92%, 
81.3% OF THIS INCREASE HAS COME SINCE 2001. BECAUSE OF THIS WE ARE 
CONSTANTLY LOOKING AT OUR POWER COSTS AND IN 2006 WE REMOVED A CIRCLE 
AND THE MAINLINE THAT PROVIDES WATER TO IT. IN ITS NINE YEARS OF 
EXISTENCE IT GENERATED $1,601,700 ON LAND THAT PREVIOUSLY WAS CHEAT 
GRASS. FOR TAX PURPOSES THIS LAND UNDER OPEN SPACES WAS ASSESSED AT 
$1147.00 AN ACRE. IT HAS NOW REVERTED BACK TO GROUND AT AN ASSESSED 
VALUE OF $8.00 AN ACRE. THIS IS MONEY THAT IS LOST TO THE STATE AND 
LOCAL ECONOMY
    OUR ``OTHER SOURCE OF POWER'', GAS AND DIESEL HAS INCREASED 355.67% 
AND 624.54% RESPECTIVELY
    ON THE OTHER HAND OUR COMMODITIES SUCH AS WHEAT HAS DECREASED 26%. 
POTATOES HAVE INCREASED 4.53% THE FACT THE WE ARE STILL HERE IS AMAZING 
TO U.S. NOT TO MENTION OUR BANKER!!! WE HAVE SURVIVED BECAUSE WE HAVE 
BECOME MORE EFFICIENT AND HAVE INCREASED OUR CROP YIELDS.
    THE SNAKE RIVER IS THE HEART AND BLOOD OF OUR FARM. WE ARE TRULY 
FORTUNATE TO HAVE A SOURCE OF ENERGY THAT IS AS EFFICIENT AS HYDRO-
POWER. WHAT OTHER SOURCE OF ENERGY DO WE HAVE THAT HAS NO EMISSIONS, NO 
WASTE, NO HAZARDOUS CLEANUP. A RENEWABLE SOURCE THAT CAN BE USED FOR 
RECREATION, FOOD PRODUCTION, TRANSPORTATION, FLOOD CONTROL AND 
WILDLIFE. IN THIS DAY AND AGE WE NO LONGER CAN AFFORD TO JEOPARDIZE 
THIS AMAZING POWER SOURCE BY COURTS AND JUDGES THAT KNOW NOTHING OF 
THIS GREAT NATURAL RESOURCE. SPILLING WATER TO FLUSH FISH DOWN THE 
RIVER IS SENSELESS AND ENVIRONMENTALLY UNSOUND.
    WE NEED TO PUT SOME COMMON SENSE INTO THE ENDANGERED SPECIES ACT. 
WE CANNOT CONTINUE TO LEAVE FAMILIES SUCH AS MINE OUT OF THE EQUATION. 
I AM JUST AS IMPORTANT AS A FISH AND I CAN DAMN WELL TELL YOU THAT MY 
THREE YEAR OLD GRANDDAUGHTER IS MORE IMPORTANT!!!! YOU CAN PATCH A ROOF 
USING TWENTY DOLLAR BILLS BUT IT OBVIOUSLY IS TOO COSTLY AND ONLY A 
TEMPORARY FIX. WE HAVE TO APPROACH THIS PRACTICALLY NOT JUST TRYING TO 
BUY OFF THE PROBLEM.
    THE ENDANGERED SPECIES ACT IS A TOOL NO DIFFERENT THEN A SHOVEL PUT 
TO COMMON SENSE USE IT CAN PRODUCE BUT IN THE WRONG HANDS IT CAN JUST 
AS EASILY DESTROY. LETS PUT OUR DAMS BACK TO USE FOR THE ENVIRONMENT.
                                 ______
                                 
    Miss McMorris. Mr. Espinoza now.

 STATEMENT OF RICARDO ESPINOZA, PRESIDENT OF THE BOARD, PASCO 
               SCHOOL DISTRICT, PASCO, WASHINGTON

    Mr. Espinoza. Good morning. I want to begin my testimony by 
sincerely thanking the House Water and Power Subcommittee, 
Congresswoman McMorris, and Congressman Hastings for the 
opportunity to testify this morning on the impacts to public 
education as brought on by the salmon recovery efforts in the 
Northwest.
    The complex issue of salmon recovery in the Northwest is 
one in which sides in the debate are holding dear to their 
passionate arguments for their particular viewpoint. I'm not an 
expert on the management of the infrastructure of the Northwest 
electrical power grid, but I do, like so many of my fellow 
citizens, know how to flip on a light switch and operate a 
couple of power tools.
    And I'm not an expert on salmon but I do, again, like so 
many others, possess a few photos of me at home of me holding a 
couple that didn't get away.
    I'm a School Board member. I've served eight years on the 
Pasco School District's Board of Directors, and I also serve as 
a member of the Board of Directors for the Washington State 
School Directors Association. I'm here today to share with you 
the impacts on the future of our children's education in light 
of the salmon recovery efforts.
    In the past five years, the Pasco School District has paid 
approximately $5.7 million in electrical costs. Approximately 
20 percent of our electric bill goes toward salmon recovery, 
$1.1 million in five years.
    The point of my testimony could be summed up in one 
sentence. The further out the school district's dollars move 
away from the classroom, the more difficult the task of 
educating our children becomes. $1.1 million could have paid 
for four or five teachers each of the past five years. In our 
schools we need math coaches, reading coaches, coaches to help 
other teachers, newer teachers in these particular areas.
    Our new teachers need some seasoned veteran teachers. They 
need them to help them to succeed. Our expected result would be 
that children would receive a better education and be more 
prepared for adulthood.
    $1.1 million could have purchased approximately 226 
computers for each of the past five years. The cost of 
initiating and maintaining a computer technology program in a 
school district is high and ever increasing. In this age of 
information technology we have to not only provide students 
information but the abilities to use it. It was a surprise to 
me to see once we did lay out the capital for a technology 
program how quickly a lot of the hardware became obsolete and 
we had to go out and purchase more. Or in some of our new 
higher technologies bulbs will burn out at $300 a pop.
    $1.1 million could have purchased approximately 2,600 math 
and science textbooks for each of the past five years. The 
school districts across the state have and are exploring the 
changes of curriculum to better meet the grade level 
expectations. Updated research based texts and the proper 
instruction are key in helping students learn.
    These are three examples from a long list of programs and 
activities that many districts are not able to fund, or if they 
do reallocate existing resources, they do so at the expense of 
other promising interventions for all students. All day 
kindergarten, extended days for learning, reducing the academic 
Achievement Gap, staff development, reduction of class sizes, 
dropout prevention, these are some of the other areas that 
school districts would have addressed.
    Salmon recovery is an important goal, and not many people 
would argue the point. However, it is important to remember 
that education dollars that stay close to the classroom are 
more effective in our children's education. Like everyone else, 
school districts pay for the electricity we consume. We do need 
the electricity to operate our schools, but the 20 percent on 
the cost used to pay for salmon recovery, the $1.1 million over 
five years, those are education dollars that are very far 
removed from our classrooms.
    Put another way, any increase in the electricity dollars 
going to the recovery of schools of fish adversely affects the 
schools of our children.
    I hope my brief testimony helps you better understand the 
impact of the electrical costs and salmon recovery to the 
Washington State public school system. The world we're sending 
our children into upon graduation is far different from the 
world we entered when we received our high school diplomas.
    Education reform in Washington State is on the right path. 
It takes time and resources to meet the requirements of our 
legislature and our Congress and, more importantly, to prepare 
our students for their futures. Every dollar counts because, 
ultimately, every child counts. I thank you once again.
    [The prepared statement of Mr. Espinoza follows:]

 Statement of Ricardo Espinoza, President, Pasco School District Board 
   of Directors, Member, Board of Directors for the Washington State 
                      School Directors Association

    I begin my testimony by sincerely thanking the House Water and 
Power Subcommittee for the opportunity to testify this morning on the 
impacts to public education as brought on by salmon recovery efforts in 
the Northwest. The celebration of our national independence, our 
nations 230th birthday three days ago serves to remind us all that we 
are a nation governed of the people, by the people and for the people; 
your presence at Columbia Basin College today validates our democracy 
in action. Thank you once again.
    The complex issue of salmon recovery in the Northwest is one in 
which most sides in the debate are holding dear their passionate 
arguments for their particular viewpoint. I am not an expert on the 
management of the infrastructure of the northwest electricity power 
grid, but I do know how to flip on a light switch and operate a few 
power tools. I am not an expert on salmon, but I do possess a few 
photos at home of me with one or two that ``didn't get away''. I am a 
school board member, serving eight years on the Pasco School District 
Board of Directors and I also serve as a member of the Board of 
Directors for the Washington State School Directors Association. I am 
here today to share with you the impacts on the future of our 
children's education in light of the salmon recovery efforts.
    Article 9, section 1 of the Washington State Constitution reads as 
follows:
        It is the paramount duty of the state to make ample provision 
        for the education of all children residing within its borders, 
        without distinction or preference on account of race, color, 
        caste, or sex.
    Our state legislature passed the Education Reform Act (HB 1209) in 
1993 that set the present course to meet this charge. Since that time 
education reform has had a number of successes. The Washington 
Assessment of Student Learning (WASL) is our assessment tool that 
informs parents, the Office of Superintendent of Public Instruction, 
and Congress as to how we, local school districts are performing. 
Academic achievement trend lines show that we are getting better at 
preparing our students to meet the challenges that life will bring. 
Examples of these successes:
      In February 2006, Washington State was recognized by the 
College Board as one of the top three states in the nation to mark the 
strongest increases in proportion of students taking Advanced Placement 
exams.\1\
      In May 2006 Washington State earned higher scores than 
the national average in the National Assessment of Educational Progress 
in 4th and 8th grade.\2\
      Washington state students scored an all time high in math 
and verbal portions in the SAT and also scored above the national 
average in 2005.\3\
      Locally, Pasco High School was recognized by Newsweek 
magazine as the 905th best high school in the United States in May of 
2005.\4\
      The Kennewick Reading program is a national model for 
improving education; its goal of 90% of students in 3rd grade reading 
at grade level was achieved this year.\5\
Education reform is working in Washington State; the evidence for this 
fact is broad and deep. We should all be proud of the effort of our 
students, our teachers and our administrators. Yet challenges remain 
before us and it is fair to say that these challenges possess costs 
outside of local control that are constantly rising.
    In public education our three largest challenges are (1) preparing 
the class of 2008 and future graduating classes to successfully pass 
their 10th grade WASL; preliminary results indicate that approximately 
54% of this year's sophomore class (Class of 2008) passed the math 
portion of the WASL.\6\ The WASL passage is a Washington State mandate; 
(2) The federal law ``No Child Left Behind'' imposes a large number of 
requirements on local school districts with many associated costs 
absorbed using existing resources\7\; (3) the federal law ``Individuals 
with Disabilities Education Act'' has not been fully funded by congress 
and again, school districts must use existing resources to meet the 
requirements of this law.\7\ Public education shares expenditures 
similar to other public and private entities such as rising fuel costs 
(Pasco school busses travel more than a million miles annually), rising 
health care costs (The Pasco School District is the largest employer in 
Franklin County) and of course, electricity.
    In the past five school years the Pasco School District has paid 
approximately 5.7 million dollars in electrical costs. Twenty percent 
of our electric bill goes towards salmon recovery. 1.1 million dollars 
in five years. As I briefly outlined, public education has mandates to 
meet and funding issues to resolve. The point of my testimony can be 
summed up in one sentence: the further out a school district's dollars 
move away from the classroom, the more difficult the task of educating 
our children becomes.
    1.1 million dollars could have paid for four or five teachers for 
the each of the past five years. We need math coaches (teachers) and 
reading coaches (teachers). Our new teachers need seasoned mentors 
(teachers) to help them succeed. Our expected result: children 
receiving a better education and being more prepared for adulthood.
    1.1 million dollars could have purchased approximately 226 
computers for each of the past five years. The cost of initiating and 
maintaining a computer program in a school district is high and ever-
increasing. In this age of technology we have to not only provide 
students information, but the abilities to use it.
    1.1 million dollars could have purchased approximately 2600 math 
and science text books each of the past five years. School districts 
across the state have or are exploring the changing of curriculum to 
better meet the grade level expectations. Updated researched based 
texts and the proper instruction are key in helping students learn.
    These are three examples of from a long list of programs and 
activities many districts are not able to fund, or if they do 
reallocate existing resources, they do so at the expense of other 
promising interventions for students. All day kindergarten, extended 
days for learning, reducing the Achievement Gap, staff development, 
reduction of class sizes, dropout prevention and teacher pay and 
benefits are other areas that school districts could address, however 
time does not permit me to go into an in depth discussion on the needs 
of school districts to meet the mandates from our state legislature and 
Congress.
    Salmon recovery is an important goal, not many would argue the 
point; however it is also important to remember that education dollars 
that stay close to the classroom are more effective in our children's 
education. Like everyone else, we pay for the electricity we consume. 
We do need the electricity to operate our schools but the twenty 
percent on that cost used to pay for salmon recovery, the 1.1 million 
dollars over five years, those are education dollars that are very far 
removed from our classrooms. Put another way, any increase in 
electricity dollars going to the recovery of schools of fish adversely 
effects the schools of our children.
    I hope my brief testimony helps you better understand the impact of 
electrical costs and salmon recovery to the Washington State public 
school system. The world we are sending our children into upon 
graduation is far different than the world we entered when we received 
our high school diploma. Education reform in Washington State is on the 
right path; it takes time and resources to meet the requirements of our 
legislature and Congress and more importantly, to prepare our students 
for their future.
    I thank you once again for this opportunity to speak to the 
subcommittee on this issue today.

                               Work Cited
    1.  http://www.k12.wa.us/Communications/pressreleases2006/
APexams.aspx
    2.  http://www.k12.wa.us/Communications/pressreleases2006/
NAEPScience.aspx
    3.  http://www.k12.wa.us/Communications/npressreleases2005/
SAT2005.aspx
    4.  http://www.psd1.org/psd2/attachments/57381--4.pdf
    5.  http://www.tri-cityherald.com/tch/opinions/story/7917074p-
7810576c.html
    6. http://www.k12.wa.us/Communications/pressreleases2006/
StrongGains-
      2008Grads.aspx
    7.  http://www.nsba.org/site/docs/38700/38616.pdf
                                 ______
                                 
    Miss McMorris. Thank you. Mr. Cooper.

 STATEMENT OF SCOTT COOPER, DIRECTOR, PARISH SOCIAL MINISTRY, 
   CATHOLIC CHARITIES, SPOKANE PARISH, SPOKANE, WASHINGTON, 
      ACCOMPANIED BY BONNIE ROBERTS, REPRESENTATIVE VOICES

    Mr. Cooper. Good morning. My name is Scott Cooper, and I 
direct Parish Social Ministries to Catholic Charities in 
Spokane, which is the largest sectarian social service provider 
in Eastern Washington. I want to thank you again for this 
opportunity to be here.
    Part of my work involves coordinating a network of 
emergency assistance providers through churches in some of the 
more rural counties in Eastern Washington. And it's in that 
capacity that I'm here with you today. The bulk of the 
emergency assistance that our network provides to low-income 
people and families in crisis is for utility bills. These cases 
represent not only the majority of the households we assist, 
but also the majority of our assistance budget. In other words, 
we're spending more money to help more families with utility 
needs than with any other class of needs.
    Now I'd like to give you just a snapshot of who it is we're 
helping, so this is going to be a composite. We'll call her 
Sally. She's a single mother in her late 30s. She's got two 
school-age children. She's not on Welfare. She may be 
qualifying for food stamps and medical assistance, but she's 
not receiving cash grants.
    She missed a month of work because of an illness or a 
surgery, and she fell behind on her bills. She's back at work. 
She's got her income again. But those bills that she missed 
have piled up and are bearing down upon her.
    She's clearing after deductions about $1,000 a month, not 
qualifying for a housing authority voucher, so she's paying 
market rate rent of about $550 a month. So $550 every month out 
of the $1,000 or so that she's earning. Her heat during the 
winter is supplied by electricity, as it is often in lower 
income housing, and it averages around $200 a month during the 
cold season. So that gives you some sense of what her monthly 
budget looks like and what an increase of any kind does to her 
family's ability to provide food, clothing, prescription 
medication, any kind of necessity, not even counting any sort 
of something like a luxury like, oh, say, eating out at 
McDonalds for $10.
    One thing to note is that there is a network of 
governmental, corporate, and private assistance to help people 
struggling to pay their bills, and this network is never 
sufficient to meet all of the legitimate needs. For a client 
who has exhausted all the sources of aid but whose need 
continues because of medical crisis, death in the family, 
instability in the job market as they move from one job to 
another, these are the folks we're calling the working poor.
    It's also common to hear from those who do not qualify for 
the larger governmental sources of aid because of their 
slightly greater income but, nonetheless, face disconnect 
notices. Again, my concern is that all sources of aid combined 
are not sufficient to meet the needs in the present moment, not 
considering any hypothetical increases in rates.
    So with that in mind, I ask you to consider the effect on 
the poor and the larger community should those rates rise. When 
rates rise, incomes for low-income people through entitlement 
programs or through minimum wage jobs at the low pay scale do 
not typically rise in response. This is to say that increases 
in utility rates have the greatest proportional impact on the 
budgets of low-income households.
    A single digit rate increase for a family receiving TANF, 
Temporary Assistance to Needy Families, can easily mean the 
difference between winter heat and other necessities. These, in 
turn, add stressors on families which have observable results 
ranging from increased incidents of domestic violence and 
substance abuse to increased visits to medical providers and 
emergency rooms, often uninsured.
    One small private agency director I spoke to reported that 
two of the last three households she had assisted with utility 
needs were also dealing with domestic violence at the same 
time. These situations are interwoven, perhaps not directly 
causing the negative social outcome, but certainly contributing 
to it and magnifying it.
    The Spokane Neighborhood Action Program, who is the primary 
provider of government utility assistance in Spokane County, 
reports a 7 percent increase in requests for routine heating 
assistance in '06 over '05 and a 25 percent increase in demands 
for emergency heating assistance in that same year. They also 
report a large number of households seeking help in the past 
year who never sought assistance in the past, typically the 
working poor who might have been able to manage their own 
utility costs in the past years.
    Our own network is small, Catholic Charities, by comparison 
to some, but our resources are not going to be able to just 
automatically increase as the need increases in the community. 
That means we're going to be having to turn more people away 
with legitimate needs. We will not have the resources 
necessary.
    I'd like to end with a few comments on your concern of this 
committee to seek an equilibrium between the hydropower for a 
growing economy and basic human needs on one hand and the 
desire for sustainable environmental quality, particularly with 
regard to salmon runs on the other hand.
    The teaching of my faith tradition is a both/and teaching. 
Five years ago Catholic Bishops of the Northwest issued a 
pastoral letter, a teaching document, addressing this very 
topic. How do we balance the diverse and sometimes competing 
needs? It says we've got to learn a balanced analysis. Thank 
you very much.
    [The prepared statement of Mr. Cooper follows:]

                 Statement of Scott Cooper, Director, 
         Parish Social Ministries, Catholic Charities, Spokane

    Good morning. My name is Scott Cooper and I direct Parish Social 
Ministries for Catholic Charities, Spokane, the largest sectarian 
social service provider in Eastern Washington State. It is my privilege 
to be here. Thank you for this opportunity.
    Part of my work involves coordinating a network of emergency 
assistance providers through churches in some of the more rural 
counties of Eastern Washington, and it is in that capacity that I speak 
to you today. The bulk of the emergency assistance that our network 
provides to low-income people and families in crisis is for utility 
bills. These cases represent not only the majority of the households we 
assist, but also the majority of our assistance budget. Simply put, we 
are spending more money to help more families with utility needs than 
with any other class of needs--such as housing, transportation, food or 
prescriptions.
    I have been working directly with low-income households in the 
Spokane area for over ten years through three different social service 
organizations and I have observed firsthand the challenges confronting 
the poor in our communities. The first thing to note is that there is a 
large network of governmental, corporate and private assistance to help 
people struggling to pay utility bills. The second thing to note is 
that this network is never sufficient to meet all of the legitimate 
needs. It is very common to hear from clients who have exhausted all 
sources of aid but whose need continues, because of a medical crisis, 
family turmoil, or instability in the job market. It is also common to 
hear from those who do not qualify for the larger, governmental sources 
of aid because of their slightly greater income, but who nonetheless 
face disconnect notices thanks to unforeseen medical costs, a death in 
the family or even rising gas costs. Again, my concern is that all 
sources of aid combined are not sufficient to meet the needs in the 
present moment, not considering any hypothetical or actual increases in 
utility rates.
    With that in mind, I then consider the affect on the poor and on 
the larger community should utility rates rise and continue to rise. 
Just because public utilities find it necessary or desirable to raise 
the rates they charge their customers, I can think of no instance when 
there has been a corresponding increase in the social security, Welfare 
or VA benefits the poor rely upon to meet their needs. Neither has 
there been a corresponding increase in the wages paid to the working 
poor. This is to say that increases in utility rates have the greatest 
proportional impact on the budgets of low-income households, even if 
those households have comparatively modest overall bills. A single-
digit rate increase for a family receiving TANF (Temporary Assistance 
to Needy Families) can easily mean the difference between winter heat 
and other necessities such as routine prescriptions, adequate clothing 
for growing children and nutritious food. These added stressors on 
families have observable results, ranging from increased incidents of 
domestic violence and substance abuse to increased visits to medical 
providers and emergency rooms. One private agency director I spoke to 
reported that two of the last three households she had assisted with 
utility needs were also dealing with domestic violence at the same 
time. These situations and needs are interwoven, perhaps not directly 
causing the negative social outcome, but certainly contributing to it, 
reinforcing and magnifying it, making it that much more difficult to 
achieve a positive outcome.
    The Spokane Neighborhood Action Programs (SNAP), the primary 
provider of governmental utility assistance in Spokane County, reports 
a 7% increase in requests for routine heating assistance in 2006 over 
2005, and a 25% increase in demands for emergency heating assistance in 
the same year. They also report a large number of households seeking 
help in the past year who had never sought assistance from SNAP in the 
past, typically the working poor who might have been able to manage 
their own utility costs in past years. And for all of the resources at 
their disposal, SNAP is still able to assist only 30--32% of the 34,000 
Spokane County households eligible for this program. To restate, the 
current resource is insufficient to the current need. Increases in 
utility rates will only have a deleterious effect on low-income 
households, which in turn will impact the larger community with greater 
social and family instability, increasing crime rates and greater 
demands on public services. We know that one utility company in Eastern 
Washington will be increasing rates by 12% in coming months, following 
several years of no rate increases thanks to a long-term contract with 
the Bonneville Power Administration. The gentleman I spoke to at this 
utility company indicated that such long-term contracts were likely now 
a thing of the past and that this fact opened the door for more regular 
and frequent rate increases. He also warned against attempts to shift 
the rate structure from a cost basis to a market basis. The market, 
taken as a whole, might be able to sustain any rate increases that 
would follow from a ``charge what the market can bear'' philosophy, but 
low-income households would, without any doubt, be disastrously 
affected.
    Catholic Charities' own network is small by comparison to some. We 
work with a total annual assistance budget of approximately $30,000. In 
a few Eastern Washington counties, we benefit from EFSP funds 
administered by FEMA to provide emergency utility assistance. We then 
add our own private funds to that pot. In all but a few cases, even 
this combination of funds is not sufficient and our contacts in rural 
communities must turn genuinely needy people away for lack of 
resources. I would propose to this committee that any organization 
seeking to support families and a stable social structure must consider 
both the immediate and indirect effects of utility costs on fixed-
income and working poor households. Those households and society as a 
whole will bear the costs, in wider negative consequences.
    My final comments concern the balance that this committee seeks in 
the title of this hearing, the equilibrium between hydropower for a 
growing economy and basic human needs on one hand, and the economic and 
social desire for sustainable environmental quality, particularly with 
regard to salmon runs, on the other hand. The teaching of my faith 
tradition is a both/and teaching. As much as we advocate and work for 
the needs of the poor, we also hold up the sanctity of creation, and we 
cannot be asked to choose between the two. They are also interwoven. 
Five years ago, the Catholic Bishops of the Northwest issued a pastoral 
letter, a teaching document, addressing the very topic you are studying 
today: how do we balance the diverse--and sometimes competing--needs of 
the human community and also the natural systems upon which all life 
depends with the limited resources of the Columbia River watershed? I 
would point you to that teaching document as one example of a balanced 
analysis.
    I urge this committee to seek a balance that honors both sets of 
concerns, that does not set one above the other, that does not force 
one community--either the poor or the environment--to pay for short 
term benefits to the other. Our society is enormously creative--surely 
we can design solutions that safeguard both our low-income neighbors 
and the natural world while continuing to provide energy resources for 
economic needs.
                                 ______
                                 
    Miss McMorris. Thank you very much. Mr. Morrison.

 STATEMENT OF THE HON. SID MORRISON, CHAIRMAN OF THE EXECUTIVE 
BOARD, ENERGY NORTHWEST AND CHAIRMAN OF THE BOARD, YAKIMA BASIN 
              STORAGE ALLIANCE, ZILLAH, WASHINGTON

    Mr. Morrison. Thank you, Madam Chair and Congressman 
Hastings. Thank you for using the umbrella of the Water and 
Power Subcommittee as a chance to get me out and share some 
thoughts.
    My thesis for this hearing is based on a long-time 
investment involved in water issues. And I'm not here to 
complain about the high cost of electricity because of our need 
to nurture our cultural icon, the salmon, but to propose a 
solution that works for both. What we're doing now doesn't 
work. The price of power spirals upward, and we're not making 
the best investments in reaching the goal of restoring the 
salmon resource. Your legislation promoting transparency will 
help public understanding.
    My frustration with the status quo is two-fold:
    No. 1, The Endangered Species Act was intended by its 
authors to be fine-tuned over time. But because of political 
pressures it remains inflexible and inaccurate, missing the 
target in finding the most workable answers; and, No. 2, 
because of past failures of the Executive and Legislative 
branches, including me, the management of the river system is 
shifting to the judicial branch.
    Let me just briefly give you an example of what can be done 
as I think an answer that works for both salmon and for our 
power and economic resources. By the way, Doc Hastings has been 
our champion and, Congresswoman McMorris, we appreciate your 
help in supporting Senator Cantwell. The whole Washington team 
has been very good in funding the feasibility study for what we 
call the Black Rock Reservoir.
    As an example, think of what we can do if we think big and 
we all work together. Yakima River Basin is just right next 
door to us, a wonderful project back when the Bureau of 
Reclamation wasn't afraid to dream, a hundred years old. And in 
the last 50 years, whether changes have occurred, when I worked 
the issue, I inherited one drought year out of ten. Congressman 
Hastings now has the pleasure of one drought year out of four.
    So we're proposing this concept of using surplus water from 
the Columbia when nobody else needs it and power to lift that 
water into a reservoir that we call pump storage, and that 
water then is used to satisfy irrigation demands, which then 
frees up the existing Yakima River system with its five 
reservoirs for other interests such as municipal and industrial 
water supplies and, most importantly, the restoration the 
salmon resource.
    The fish story is that we used to have about 500,000 to 
800,000 returning salmon each year coming back into the Yakima 
River. Scientists have told us that it's the tributary in the 
lower 48 states that has the greatest potential for salmon 
recovery. Guess what? What's missing is water. We can vest all 
kinds of ratepayer and Federal money in bringing back 
endangered salmon and improving the expanding habitat, and it 
has some benefit, but I repeat, it doesn't work without water. 
That's where this interbasin concept of storage--Governor 
Gregoire is very enthusiastic about storage as the State is 
involved, and the funding you've provided is really the key to 
moving on with the feasibility study, which will be completed 
in 2008.
    By the way, if you build the reservoirs large enough and 
perhaps build a series of them along the Columbia, it serves as 
a storage vat. It's a logical add on to what we've been doing 
for over a hundred years in utilizing the water resource. Store 
excess water, release it when you need to rewater such things 
as the Hanford Reach, which is very sensitive environmentally, 
help with irrigation downstream, generate hydropower, and that 
list goes on.
    Let me slip on a different hat just for a second. Wouldn't 
it be better if we used surplus power to lift surplus water and 
hold it until needed? One of my responsibilities with Energy 
Northwest, and I now get periodically a phone call from our 
friend Steve Wright at BPA saying we can't sell the power, put 
the nuclear plant on economic dispatch, which is to try to 
throttle it back down. If it doesn't do it very well, they may 
be running 100 percent efficiency. We should be pumping water 
with that power during those surplus times and using it later 
when needed.
    Let me close by saying that increased costs of power is 
primarily a result of investments we make to meet the 
requirements of the Endangered Species Act. The Northwest is 
great for this. We are very environmentally conscious. But, 
ultimately, people want to know that their investments are 
targeted to do the most good.
    Like the dreams of a century ago, the Federal process must 
be far-sighted and effective instead of sending us an ever 
larger bill every year with little to show for the investment.
    The options of water storage when there is excess makes 
sense both to generate electricity and to support fish recovery 
and production. The Federal Government should either lead this 
effort or get out of the way.
    [The prepared statement of Mr. Morrison follows:]

       Statement of The Honorable Sid Morrison on behalf of the 
           Yakima Basin Storage Alliance and Energy-Northwest

    MR. CHAIRMAN, and members of the Water and Power Sub-Committee: I 
welcome you here today to the 2/3 of the State of Washington that does 
not live up to the title of the Evergreen State. The Cascade Mountain 
Range, a chain of volcanic fire, does a thorough job of holding the 
moisture-laden clouds from the Pacific Ocean to the west of us, and 
Congressman Hastings and your Vice Chair, Congresswoman McMorris, do a 
great job of representing our very intense interest in water, and fish, 
and the price of power in this dry part of the state.
    My thesis for this hearing is based on long-term interest and 
involvement in water issues, and this may surprise you, I am here not 
to complain about the high cost of electricity because of our need to 
nurture our cultural icon, the salmon, but to propose a solution that 
works for both. What we are doing now doesn't work; the price of power 
spirals upward and we are not making the best investments in reaching 
the goal of restoring the salmon resource.
    My frustration with the status quo is two-fold: (1) The Endangered 
Species Act was intended by it's authors to be fine-tuned over time, 
but because of political pressures, it remains inflexible and 
inaccurate, missing the target in finding the most workable answers, 
and (2) because of past failures by the Executive and Legislative 
branches (including me), the management of the River system is shifting 
to the Judicial branch.
    Let me spend these precious moments with you describing what is 
happening here in the Basin of the Columbia River, and what can be done 
about it. I will use the tributary just to the northwest of this 
hearing as an example of the opportunity that is ours if we will just 
think big.
    The Yakima Basin Project was undertaken by the federal government 
through the Bureau of Reclamation in the late 1800s. It was their dream 
to make the desert bloom back in the days when they were bold enough to 
have such dreams. They saw high mountains with year-round snow in the 
Cascades, and the potential for reservoirs to catch the runoff, feeding 
the rivers that fed irrigation canals, producing crops that fed people 
around the world.
    It worked. The population of the three county area involved grew 
from 25,000 to over half a million, and the products produced are world 
famous and create a very favorable balance of trade. But the weather 
has gradually changed. When I served in Congress, we were beginning to 
see the shortage of dark clouds on the horizon, resulting in one 
drought year out of ten. We scrambled to find additional reservoir 
capacity and put in place conservation measures so water usage could be 
more effective, a continuing and successful effort. Minimum flow 
requirements and stream management techniques were increased to protect 
salmon during critical times in their life cycle.
    The volume of precipitation hasn't declined with the climate change 
we have incrementally seen over the past 50 years. However, freezing 
levels in the Cascades have moved up, and the mountains no longer hold 
the snow so it will fill our existing reservoirs the three times per 
year that is required for a normal water year. Congressman Hastings now 
inherits one drought year out of four, with a multi-billion dollar 
economic impact, and all too little water for salmon production on the 
Yakima.
    Now, let me tell you the fish story. The Yakima River used to host 
the return of 500,000 to 800,000 salmon per year late in the 19th 
century. Scientists have proclaimed that the Yakima and it's 
tributaries have the greatest potential for salmon recovery of any 
river system ``in the lower 48.'' The Yakama Indian Nation is 
increasingly being recognized for it's expertise in the operation of 
supplementation facilities (these used to be called ``hatcheries''--and 
the goal is to strengthen and expand wild stocks of salmon). The 
recovery stage is set.
    What is missing is water. We can invest all kinds of ratepayer and 
federal money in bringing back the endangered salmon, improving and 
expanding habitat, and it all has some benefit, but, I repeat, it 
doesn't work without water.
    So, how does all of this weave together to provide an answer to the 
high cost of fish? A group of us have formed the Yakima Basin Storage 
Alliance to look for water supply answers in our area. Our plan is 
called ``Black Rock'', an inter-basin pumped storage reservoir, 
utilizing water pumped out of the Columbia River when it is surplus to 
all other needs. This reservoir water is released through the summer 
season to satisfy the needs of existing irrigated acreage with a least 
70 percent of court-proven legal water rights. The existing Yakima 
Basin Project, with it's five high mountain reservoirs, then can be 
managed for fish production and greatly reduced other needs in the 
three-county Basin. The goal is a ``normative'' River as flowed a 
hundred years ago, with some modifications to make it even kinder and 
gentler for fish than Mother Nature provided.
    Is this the way to get the best results for the investment in an 
endangered resource? We think so, and Congressman Hastings, backed by 
other House members and our two Senators, particularly Senator 
Cantwell, have been heroic in finding resources to match the state in 
funding a Bureau of Reclamation (BOR) Feasibility Study that is in it's 
third year and will be completed in 2008.
    During this study, we found an interesting problem in the 
Principles and Guidelines the BOR must follow in determining the 
economic value of producing salmon. They figure the increased number of 
salmon resulting from the Black Rock Reservoir concept, multiply it by 
pounds per fish, and calculate what that tonnage does to the retail 
price. The problem is that northwest ratepayers paid $695 million last 
year in increased power costs and water spilled to help salmon 
recovery, and no one I have talked with can recall getting a fish out 
of the deal. Next year it could be a billion dollars, and it seems to 
me that is the economic value of replacing the salmon, in addition to 
the cultural and religious value to the Yakamas and other Columbia 
River native Americans.
    The Columbia River doesn't suffer as much as the smaller river 
systems I have just described. It's roots are in the higher mountains 
of the Rockies, and it has capacity to store some water in Lake 
Roosevelt behind Grand Coulee Dam. However, when we get rain instead of 
snow, and the tributaries of the Columbia swell with water that can't 
be managed for fish or power or the economy, everyone suffers.
    Let me slip on a different hat for a moment that relates to high 
water and the high price of power. The Columbia Generating Station, a 
nuclear plant just a few miles up the Columbia River producing 1,150 
megawatts for the Bonneville Power Administration (BPA), gets a phone 
call when the river system is running high asking that we put the power 
plant on ``economic dispatch''. This is an expensive process throttling 
back a nuclear plant, built to run most efficiently for years at 100 
percent power, because ``we can't sell the power''. What it also says 
is that someone can't control the River for a broad base of benefits, 
or won't.
    The high cost of power that brings this Committee here today is not 
because it costs more for energy production in this corner of the 
nation. Looking at this historically, the opposite is true. Federal 
leadership and planning, augmented by local public power utilities, 
have harnessed the water flowing to the Pacific in the Columbia and 
Snake Rivers, used that energy to produce the aluminum it took to win 
World War II, and to irrigate millions of acres of productive cropland. 
Power rates here are the envy of much of the country, even with the 
expensive modifications made to turbines, fish ladders, and collection 
systems to safely transport salmon both up and down the rivers as they 
play out their fascinating life cycle.
    The increased cost of power is primarily the result of investments 
we make to meet the requirements of the Endangered Species Act. The 
northwest is environmentally conscious and more willing than most to 
protect our natural resources, but it must be, in the long haul, 
efficient, and targeted to do the most good. Like the dreams of a 
century ago, the federal process must be far-sighted and effective, 
instead of sending us an ever larger bill year after year with little 
to show for the investment.
    The options of water storage when there is excess makes sense, both 
to generate electricity and to support fish recovery and production. 
The federal government should either lead this effort or get out of the 
way.

                               * * * * *

    Morrison is a former Member of Congress, 1981 through 1992, from 
the 4th District of Washington. He chairs the Boards of both the 
organizations listed above, and both have a vital interest in the 
management of the Columbia River and it's tributaries.
    The Yakima Basin Storage Alliance is a broadly based group 
interested in assuring a future for the Yakima River Basin, a 100 year-
old Bureau of Reclamation project that is suffering dramatically from 
climate changes that inconsistently bring high mountain snow to feed 
the reservoirs that supply the water for fish, irrigation, municipal 
and industrial use, and recreation.
    Energy-Northwest in a Joint Operating Agency under Washington State 
law that supplies electrical energy to it's public power member 
utilities at cost. It operates a nuclear power plant, wind farms, solar 
farm, hydro projects, and other energy activities.
                                 ______
                                 
    Miss McMorris. Very good. Next is Mr. Wright, Administrator 
of BPA. We really appreciate you rearranging your schedule to 
be here. What we're going to do is have you share your written 
testimony and then we're going to each ask you maybe five 
minutes of questions and then we'll let you be on your way so 
you can get on. Thank you very much.

  STATEMENT OF STEVE WRIGHT, ADMINISTRATOR, BONNEVILLE POWER 
 ADMINISTRATION, PORTLAND, OREGON; ACCOMPANIED BY BILL MASLEN, 
  MANAGER, FISH AND WILDLIFE, BONNEVILLE POWER ADMINISTRATION

    Mr. Wright. Thank you very much. It's an honor to be here 
today with the Subcommittee, and it's a great honor to follow 
Sid Morrison, who was a great Congressman from this area.
    I want to focus on three points today. First, I think that 
we have made tremendous progress in this region toward salmon 
recovery and I would like to acknowledge that. Second, I want 
to summarize the costs that are covered by BPA ratepayers 
supporting those efforts that are creating that success. And, 
third, describe some of the implications of the ongoing 
litigation and where it can lead us as we seek to address that 
recovery.
    With respect to results, after more than 20 years of 
efforts we are producing some real successes in this basin. 
Each of the last four years we have seen returning Chinook in 
the Columbia that exceeded the historical high year in the 60 
previous years, going back to when Bonneville Dam was built and 
first able to accurately count the first Chinook.
    We've also seen ESA listed fish in the basin, substantial 
increases on all of those fish between the years 2000 and 2004. 
In river survival of yearling Chinook is higher than it has 
ever been, at least in terms of when we've been able to measure 
it. Adult salmon and steelhead are estimated to survive through 
the hydrosystem at a rate of about 98 percent, which is 
equivalent to pre-dam levels.
    In 2005 juvenile survival in the Snake and upper Columbia 
exceeded the performance standards that were established in the 
2004 biological opinion. So we've had some real victories here 
over the course of the last years.
    But I do need to say that all of these years of effort have 
resulted in the low-hanging fruit having been plucked. We are 
increasingly facing the problem of survival benefits in the 
hydrosystem being harder and harder to come by, with additional 
investments producing less results.
    Now, with respect to costs, the improvements that we've 
made have come at a substantial cost. The Northwest Power and 
Conservation Council has concluded that the total costs over 
the last 20 years to fish and wildlife covered by the 
Bonneville Power Administration ratepayers is about $7.8 
billion, the underscore would be $7.8 billion dollars.
    Fiscal Year 2007 we estimate the costs at around $350 
million for out-of-pocket expenses and over $300 million for 
lost hydrosystem costs, changes in the operation of the 
hydrosystem. That's for physical year 2007. And we see those 
cost extending as far as the eye can see. This currently 
represents about 30 percent of Bonneville's wholesale power 
rate.
    H.R. 4857, sponsored by Congresswoman McMorris, does direct 
the power marketing administrations across the country to 
include the ESA costs on customers' bills. While the 
Administration does not have a position at this time on the 
bill, the Administration does support increased accountability, 
and we believe this bill would support increased 
accountability, and we find many things to like in the bill.
    We would recommend the combining of ESA costs and Northwest 
power costs, at least with respect to Bonneville, because there 
is a tremendous overlap and we find it hard to separate those 
costs.
    Where do we go from here? Many human activities in the 
basin have created the problems that we are seeking to address 
today. I think there's general agreement across the region that 
we need an ``all H'' approach, one that addresses hydro, 
harvest, hatcheries, and habitat.
    That District Court that was referenced earlier advised an 
``all H'' approach. To simplify, the District Court advised 
that to meet the ESA requirements the Federal Columbia River 
Power System must take into account all mortality, not just the 
mortality caused by operation of the FCRPS. This ruling further 
suggests that if a fish is not on the road to recovery, any 
proposed action funded, authorized, or carried out by the 
Federal Government, even though it may not appreciably reduce 
salmon recovery or survival, must, along with all the other 
activities, put the fish on the road to that recovery.
    The District Court's ruling, if sustained by the Ninth 
Circuit, would apply to all proposed actions in the region and 
all proposed actions, including harvest and habitat would be 
further called upon to share the burden. From where we sit, we 
think that this means that in effect we are all in this 
together. We are all going to have to find solutions.
    The Administration supports and has worked hard to develop 
a recovery plan, but we believe that this ruling has gone too 
far. Having said that, though, we do believe that the ruling is 
appropriate with respect to its focus on a knowledge approach. 
The District Court has encouraged a collaborative regional 
process to develop an ``all H'' plan. We support this 
wholeheartedly and are encouraged by the substantial agreement 
that the Pacific Northwest should define its own destiny. And 
we have good support and active involvement of the States and 
Tribes in that ongoing collaborative process.
    Let me make one other point and then come to a conclusion 
here. One of the things that has increasingly become clear to 
us as a result of the District Court ruling is that we are 
going to need to rethink and reorder some of our fish and 
wildlife spending priorities. I provide an example of that in 
my written testimony with respect to the Northeast Oregon 
hatchery.
    The bottom line is that particularly with a program of this 
magnitude we need clearly articulated goal lines, metrics to 
describe our process, and cost effectiveness standards. Again, 
we're going to have to work together as a region in order to 
accomplish that. At $750 billion a year annually, salmon 
recovery needs to be managed like a business.
    The largest fish and wildlife restoration program in the 
world is happening here in the Northwest, and I think that's 
fitting given the citizens of the Northwest feel strongly about 
the environment and nature in general.
    The recent District Court ruling provides both risk and 
opportunity for us as a region. We, Bonneville and the Federal 
agency, want to be part of taking advantage of the opportunity 
to forge a regional consensus that delivers salmon recovery 
cost effectively. Thank you. And we'll do your questions.
    [The prepared statement of Mr. Wright follows:]

   Statement of Stephen J. Wright, Administrator and Chief Executive 
  Officer, Bonneville Power Administration, U.S. Department of Energy

    Good morning Congresswoman McMorris, Congressman Hastings. Thank 
you for the opportunity to testify today. My name is Steve Wright; I am 
the Administrator of the Bonneville Power Administration (BPA). I am 
pleased to be here today to discuss the impact of the Endangered 
Species Act (ESA) requirements on BPA costs and our efforts to ensure 
that we are achieving real biological results for endangered salmon and 
steelhead.
    BPA is committed to our responsibilities to protect, mitigate and 
enhance fish and wildlife affected by the Federal Columbia River Power 
System (FCRPS), and to provide the citizens of the Northwest with an 
economical and reliable power supply. This includes a commitment to 
conservation of salmon, steelhead, and other listed fish under the ESA. 
We believe the citizens of this region want to protect and recover 
these fish, and we share that goal. We also believe that Northwest 
citizens understand the tremendous value of the lower-cost, clean 
hydropower that the Federal dams on the Columbia River and its 
tributaries provide to us. We continue to seek to achieve our twin 
goals of supporting a healthy Northwest economy and environment.
    Today, I'd like to give you an update on the very ambitious set of 
actions the Federal action agencies are taking for listed fish. I'll 
also talk about the impact of fish costs on BPA's power rates. Finally, 
I will highlight for you the risks and opportunities that we see in the 
current direction of ongoing litigation, specifically the remand of the 
2004 FCRPS Biological Opinion, now before the Ninth Circuit Court of 
Appeals. There are far-reaching implications for that litigation. Costs 
are uncertain, but they will be borne not only by BPA customers, but by 
a wide range of other businesses, government, and industry in the 
region.
    This is why we are strongly supporting the collaborative process 
among Federal, State, and Tribal sovereigns established under the 
remand as a way to develop a solution to this problem. We believe that 
a regionally developed 10-year plan of priority actions by all entities 
and across all life stages for ESA fish would be the best outcome of 
the litigation and the best outcome for the region.
Recent Results
    For over a decade, the Federal action agencies (BPA, the U.S. Army 
Corps of Engineers, and the Bureau of Reclamation) have been 
implementing an extensive program of hydro, habitat, and hatchery 
improvements for conservation of ESA listed fish. We have achieved 
notable successes and urge more attention on the efforts for recovery. 
The results of the last few years are very encouraging. The ultimate 
measure of progress, of course, is the number of adult wild and 
hatchery salmon and steelhead that return to spawn each year in the 
Columbia and Snake Rivers. These numbers, over the last four years, 
have shown the highest salmon returns for Chinook salmon in the 
Columbia River Basin since we began recordkeeping over 60 years ago. 
(See Graph 1.) Moreover, listed fish stocks in the Columbia Basin have 
witnessed increased returns in the last few years. (See Graph 2.) This 
shows that the fish can respond powerfully. It is also important to 
note that while overall salmon numbers may be improving, the situation 
for individual species may be less favorable. Because fish populations 
can vary widely from year to year, it is important that we sustain 
long-term perspective on recovery.
    On average, in river survival of yearling chinook salmon is higher 
than ever measured. (See Graph 3.) Adult salmon and steelhead survival 
is estimated at about 98 percent or higher at each dam--equivalent to 
pre-dam survival.
    The Federal action agencies recently issued their 2005 Progress 
Report, covering actions to protect and recover ESA-listed Columbia 
Basin salmon and steelhead (www.salmonrecovery.gov). The report 
described the substantial progress we made this past year with actions 
that achieved real biological results and improved conditions for the 
fish.
    Salmon must be able to pass the dams if we are to succeed in 
recovering salmon. This is why over $1 billion of capital over a couple 
of decades has been invested in measures to improve salmon passage at 
Federal hydro facilities in the Columbia Basin resulting in substantial 
survival improvements. In 2005 juvenile survival rates were up for both 
Snake River and Upper Columbia River spring/summer chinook and 
steelhead, exceeding the average performance standard that NOAA 
Fisheries set for the action agencies in the 2004 FCRPS BiOp. (See 
Graph 4.) In 2004 the Federal action agencies committed to the 
deployment of a substantial investment in state-of-the-art juvenile 
fish passage systems at all eight Columbia/Snake River Federal mainstem 
dams. These systems are proving very effective. Removable spillway 
weirs, or ``fish slides,'' at Lower Granite and Ice Harbor dams deliver 
an estimated 97-99 percent survival for young spring migrants, while 
spilling two to three times less water. Juvenile survival through the 
recently-completed Bonneville Dam corner collector is nearly 100 
percent.
    We have now picked the ``low hanging fruit'' for hydrosystem 
operations impacts and we are reaching a point of diminishing returns 
for additional hydrosystem operations and improvements. Future 
improvements can be found by refining well-known approaches. Spill, for 
example, may be adjusted to improve the ``spread the risk'' strategy by 
scheduling spills and barge transports for juvenile fish according to 
the times of year when each is most effective. The costs and benefits 
of targeting spill are very large and important. The additional spill 
ordered on June 10, 2005, by the District Court for the period June 20 
to August 31, 2005, cost Pacific Northwest ratepayers $75 million. 
According to NOAA Fisheries, it is uncertain whether the operation was 
beneficial or detrimental to fall chinook, and most of the fish had 
passed the dams by late July.
    To complement improved hydrosystem operations, the Federal action 
agencies also fund a wide range of other hydro, habitat, and hatchery 
actions that make a real difference for fish. The 2005 progress report 
documents substantial improvements including:
      Caspian tern predation on juvenile salmonids in the 
Columbia River estuary has been reduced from a range of 7 to 15 million 
in 1999 to about 3.6 million in 2005 by moving these birds downstream 
nearer the ocean where they feed less heavily on juvenile salmon and 
steelhead.
      Pikeminnow predation on juvenile salmonids has been 
reduced by approximately 25 percent since the program began in 1990, 
saving approximately 2 to 4 million juvenile salmon. Intensified effort 
since 2004 has yielded an increased pikeminnow catch of over 50 
percent.
      With our partners, we completed 42 voluntary water 
transactions around the region, each addressing a significant 
opportunity to restore instream flows in Columbia Basin tributary 
streams and rivers. In the third full year of operation, the Columbia 
Basin Water Transactions Program delivered 530 cubic feet per second of 
water to Columbia Basin streams and improved flows on nearly 900 miles 
of streams.
      In 2005, we installed screens at 19 barriers to restore 
access to over 180 miles of stream for fish. Overall since 2000, fish 
passage improvement efforts in the tributaries have resulted in fish 
regaining access to over 1,280 miles of stream.
      In the lower Columbia River estuary, we have acquired 
over 660 acres of fish habitat since 2000. In 2005, over 300 acres were 
being actively restored.
      Safety-net hatcheries continue to reduce the extinction 
risk of Snake River sockeye, spring/summer Chinook, fall Chinook and 
steelhead, and mid- and lower Columbia steelhead populations. In one 
such program, 348 Snake River sockeye adults returned to Redfish Lake 
since 1999--a 20-fold increase over the total of 16 wild fish that 
returned from 1990 to 1998.
    We intend to build on this success. In 2004, the Corps, Reclamation 
and BPA committed to a 10-year plan of extensive actions to improve 
hydrosystem survival and improve habitat. We also forego some power 
generation in addition to salmon spills for other conservation reasons. 
We expect the total of these Federal agency commitments to exceed $6 
billion over the next 10 years. Nevertheless, it is not how much money 
we spend that is the gauge of our success--it is the biological results 
we have to show for the money we have spent.
The Costs
    Our success in improving conditions in freshwater and getting these 
fish through the hydrosystem comes with a large cost--we must ensure 
that it buys us the valuable success we seek. The ESA program for 
listed Columbia Basin steelhead and salmon is among the largest fish 
and wildlife restoration programs in the world. Just to illustrate how 
massive the recovery efforts are, if the water being spilled over dams 
to assist in fish passage was used instead to generate power, it would 
be enough to meet the City of Seattle's annual electric energy needs. 
And spill is just one of the many measures we are taking to assist 
salmon recovery. BPA ratepayers pay most of those costs through their 
power bills.
    A report from the Northwest Power and Conservation Council 
(Council) concludes that over the last 20 years BPA ratepayers have 
experienced $7.8 billion worth of costs attributed to fish and wildlife 
mitigation activities. These costs were paid as a result of different 
laws including the Northwest Power Act and Endangered Species Act. In 
FY 2007, BPA projects almost $700 million for fish and wildlife costs.
    These costs are reflected in our power rates as a cost of doing 
business. It is the second largest cost category in our FY 2007-09 
power rates--second only to the combined debt service costs for BPA's 
one active nuclear plant, two retired nuclear plants, and the Federal 
investment in the entire FCRPS. These costs represent more than 30 
percent of the rate we charge our 130 public utility customers for 
Federal power. It makes sense to publish and monitor the size of a cost 
this large.
    H.R. 4857, if enacted, would direct the Administrators of the 
Federal Power Marketing Administrations (PMA) to include on customers' 
monthly bills information about the costs the PMA are incurring to 
comply with ESA. We have looked at how we would implement this 
legislation were it enacted into law. We would recommend the approach 
of reporting our combined ESA-related and Northwest Power Act fish and 
wildlife mitigation costs assigned to power as a percentage of total 
power bills. While this would be an approximation of the actual amount 
of cost recovered from each individual customer, it would be more 
readily available and does not require a detailed calculation for each 
customer.
    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.
Where We Go From Here
    Many human activities have contributed over many decades to the 
fish runs we have today. In order to be successful, we will need to 
work together to address all the human-caused factors that are leading 
to salmon declines--the so-called ``four H's'' of harvest, hatcheries 
and habitat as well as hydro.
    In fact, the current rulings from the District Court on the FCRPS 
BiOp advise an ``all H'' approach. Due to the ruling on the 2004 FCRPS 
BiOP, we are now, more than ever, all in this together.
    To simplify, the District Court advised that, to meet ESA's 
requirement, the FCRPS must take into account all mortality--not just 
the mortality caused by operation of the FCRPS. This ruling further 
suggests that, if a fish is not on the road to recovery, any proposed 
action funded, authorized, or carried out by the federal government--
even though it may not appreciably reduce salmon survival or recovery--
must along with all other activities put fish on the road to recovery. 
The District Court's ruling implies that, if it is sustained by the 
Ninth Circuit, it would apply to all proposed actions in the region and 
would be called upon to carry this burden including harvest and 
hatcheries operations, federal assistance to port operations, as well 
any other distantly-related action requiring Federal approval or 
funding or carried out by the Federal Government.
    The Administration believes this ruling goes too far. The 
Administration supports and has worked hard to develop a recovery plan 
for salmon. We believe, however, the ESA requirement to avoid jeopardy 
is just what the regulations say it is--to analyze whether the 
incremental effects of a particular proposed action will appreciably 
reduce the likelihood of both the survival and recovery of the 
species--not whether a proposed action could potentially be halted 
because the effect of that action in combination with everything else 
that affects the species must be determined to create a path to 
recovery. We think the District Court's interpretation, if sustained, 
could have far-reaching ramifications.
    While we have appealed this issue to the Ninth Circuit, we continue 
to put significant efforts and hopes into the collaborative process 
with States and Tribes to come up with a regional plan consistent with 
the District Court's ruling. We are encouraged thus far that there is 
substantial agreement among those participating in the collaborative 
process that we need to define our own destiny and develop a regional 
approach that addresses all the H's and their contribution to recovery.
Setting Priorities
    As ESA costs and litigation pressures increase, it is critical that 
the region focus on the bottom line--results for the fish. This effort 
needs clear objectives and priorities for meeting the objectives. To 
accomplish this, we must--as a region--be clearer about our ESA 
objectives. How many fish do we need to be satisfied we are moving 
toward our goals for each of the fish that are listed under ESA? What 
is the mix of hatchery and natural spawning fish that is desirable in 
the interim and in the long term? Where are the priority habitat areas 
for restoration? What are our hydro survival performance measures?
    Ultimately we are working to achieve a 10-year agreement among the 
States, Tribes and Federal agencies working on the FCRPS BiOp remand 
collaboration on priority actions in the Basin. The actions we agree on 
would be guided by our knowledge of which populations of fish need what 
types of help, and what's best for the fish.
    As we work with the remand collaboration to develop a new FCRPS 
BiOp, we continue to emphasize using a biological yardstick for 
determining our success. We seek to have clearly defined objectives, or 
performance standards, in this new BiOp and actions that the best 
science shows will help to achieve them. The performance standards for 
juvenile survival through the hydrosystem provide a good example of 
establishing clear objectives.
    In addition to performance standards, the region must agree on 
funding priorities. Prioritization will enable us to achieve our 
objectives at the least cost. It is not how much money we spend that is 
the gauge of our success--it is the biological results we have to show 
for the money we have spent. In the words of the Northwest Power Act 
[Section 4(h)(6)(c)] the Power Council's Fish and Wildlife Program 
seeks to ``utilize, where equally effective alternative means of 
achieving the same sound biological objective exist, the alternative 
with the minimum economic cost....'' Under this approach, we use a 
biological yardstick, and we also keep our eye on achieving our goals 
efficiently.
    The implementation of the ESA needs to help set and enforce 
priorities. For example, recently we elected to postpone funding the 
Northeast Oregon Hatchery (NEOH) because we do not currently have the 
means to document the contribution to recovery that we believe the 
hatchery will provide. Almost 20 years in the planning, the $16.4 
million NEOH construction project was deferred last month until such 
time as a specific level of ESA-crediting for application to this 
hatchery can be resolved. We are committed to working this out with 
regional stakeholders through the remand collaboration, but we would be 
open to funding the project now with assurance that it will be 
acknowledged properly in the legal documents to follow.
    This is disappointing for the Tribes, States and BPA after working 
for years on this project. We think NEOH is a good project, and we 
believe that the hatchery can help rebuild listed spring chinook stocks 
in the Grande Ronde subbasin. But frankly we do not believe we should 
spend $16.4 million when it is not clear whether the effects of the 
hatchery will be declared to gain or lose ground in our progress toward 
achieving ESA goals. BPA currently spends $60 million per year to fund 
operations and maintenance at 28 fish hatcheries operated by States, 
Tribes and the U.S. Fish and Wildlife Service. Ultimately we must 
examine the benefits and risks to ESA listed fish from all of these 
fish hatcheries.
    NEOH is one of many mitigation efforts that have evolved through 
the Council's Fish and Wildlife Program under the Northwest Power Act. 
The Council's Program guides BPA's funding decisions. We will soon be 
working with the Council to fund about $142 million of projects for the 
first year of the Council's FY 2007-09 Fish and Wildlife Program. We 
expect the remand process will influence our spending decisions in this 
program. We also expect to balance these decisions with efforts that 
continue to benefit non-listed species.
Conclusion
    One of the largest regional fish and wildlife restoration efforts 
in the world is taking place in the Pacific Northwest. The evidence to 
date is that substantial progress is being made albeit at a substantial 
cost. The progress we have made is encouraging, but our work is by no 
means complete. We are committed to taking substantial further actions 
to improve the chances for recovery of these inspiring fish.
    Our overarching goal should be salmon recovery. And under a 
recovery plan approach, hydro operators and others will need to do more 
for the fish. We can start by collaborating to develop clear and 
specific objectives for endangered fish in the Columbia Basin. Then, to 
meet these objectives, we will need to develop a scientifically 
credible approach that addresses all the causes of salmon declines in 
the Basin. It must be an approach that recognizes that we who live in 
this Basin are all in this together and that we must all be part of the 
solution.
    Thank you for your attention, and I would be happy to answer any 
questions.
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    Miss McMorris. Again, we really appreciate you being here. 
I want to start with just asking if you would give an overview 
of electricity needs for the region and what percentage BPA is 
able to meet. And as we look forward, how do you see that 
playing out? How are we going to meet those needs and then the 
potential for not only the hydrosystem but also in what we 
might be able to do with wind and solar? Just start with an 
overview.
    Mr. Wright. So the Bonneville system, the Energy Northwest 
facility produces about 40 percent of the region's power 
supply. 90 percent of our system is produced by hydropower. 
About 60 percent of the region's electricity supply comes from 
hydropower. That compares somewhere between 10 and 15 percent 
at the national level.
    This is a region that is heavily reliant on hydro basically 
because of the Columbia and Snake River systems, much more so 
than other parts of the country and other parts of the world. 
That hydrosystem has created an economic advantage for this 
region. Hydro is a low-cost resource relative to other 
potential resources, coal, natural gas.
    The fact of the matter is, though, as we go forward we have 
exploited the hydrosystem to its maximum potential. There is 
very little left in terms of--and we do expect our economy to 
grow. The forecast is we see substantial growth in our region 
over the course of the next five to ten years. In fact, we 
expect demand to exceed supply around 2010. So we need to 
develop some resources of supply.
    There are difficulties in terms of development of resources 
and supply. The resistance to coal, to nuclear. Natural gas was 
the resource of choice, but with the extreme volatility and the 
tremendous price increase in the last few years it looks less 
attractive than it did just back in 2001, 2002.
    There is a tremendous amount of wind being developed in 
this region, particularly in this area. We are going to have 
close to 1,000 megawatts of wind developed just since probably 
about 2002 through the next year or two just in this area. Just 
for a second, pause for a moment and think about the size of 
John Day Dam. Essentially, we're a developing a resource about 
the size of John Day Dam right here in this area of the 
country. That's occurring, in part, because it's a windy area. 
It's occurring, in part, because of the opportunities for 
farmers to be able to capture the benefits of the land. It's 
also occurring, in part, because of the ability to--
hydrosystem. Wind is not a dispatchable resource where you can 
control the amount, but you can with a hydrosystem.
    I would say one of the concerns to begin to address this 
question is we're running out of the potential to integrate new 
wind with the hydrosystem. There's such a tremendous growth of 
wind in this region that we're going to start reaching some 
physical limits. To the extent that we limit the capability of 
the hydrosystem for other operations for whatever they may be, 
then there is an overlap.
    Miss McMorris. Would you talk about the difficulty in 
estimating ESA costs on the BPA system and what are some of the 
challenges and how you see that playing out when you move 
forward?
    Mr. Wright. Yes. I think a couple things. First, there are 
certain costs which are relatively easy to figure. We have 
costs associated with ongoing direct program activities, 
habitat, hatcheries. We know what the dollars are going out the 
door for those. We have other costs of nearly a billion dollars 
has been invested in the system, actually more than a billion 
dollars at this point, at the dams to try to improve juvenile 
and adult survival. And, of course, we know what those are.
    We also have a set of costs associated with hydrosystem 
operation where we've changed the operation to spill to 
increase flow. That increases costs. Although there is debate 
about that, about how those costs should be calculated, and 
you'll see it in some of the testimony from some of the other 
witnesses today. The cost of that varies with the market. If 
energy is lost, then when market prices are low, the cost is 
relatively low. And when the prices are high, the costs are 
much higher. One of the challenges for us is that is based on 
what the market would be.
    Another challenge for us is that many of these activities 
support more than one of our requirements in the law. Northwest 
Power addresses a different set of fish and wildlife mitigation 
responsibility than the Endangered Species Act. But when you 
make a modification for a dam and it improves juvenile 
survival, it helps both ESA listed fish and non ESA listed 
fish. So you're struggling with the question of how do you 
calculate those costs of the ESA with Northwest Power, which is 
why we recommend to you the fact we meld those together because 
we're not confident that we can separate those costs in a 
meaningful way.
    Miss McMorris. I have just one last question. Some have 
talked about calculating the irrigation costs as a part of the 
customer bill. I just wanted to ask you to comment on that if 
that is possible.
    Mr. Wright. Well, I would say, first of all, that there are 
estimates out there. Both Bonneville and Northwest Power have 
done estimates of the lost power generation associated with 
irrigation. So we have those estimates. And we could come up 
with those estimates similar to the way we addressed fish and 
wildlife costs. So I would not say that's an impossible task, 
that we could if you so desire.
    Miss McMorris. Good. Thank you.
    Mr. Hastings. Steve, thanks for being here. I just have a 
couple of questions. I know that you are looking at long-term 
power contracts with your customers. I want to run through that 
process. Are there contractual methods going to the process of 
capping the overall fish costs to ratepayers or maybe reducing 
the likelihood of any increases in fish costs contractually as 
you look at that?
    Mr. Wright. So I would say, no, that we do not have those. 
The long-term contracts implement statutory requirements that 
we have, and then there are some requirements for fish and 
wildlife both under the Endangered Species Act and Northwest 
Power Act. And as we issue these contracts where the customers 
would be committed to taking the power and paying for it and 
paying for it would be based on whatever our cost is, and that 
cost would based on our current statutory requirements.
    Mr. Hastings. And those statutory requirements would 
mandate you can't put anything in the contract that would 
change that; isn't that correct?
    Mr. Wright. Certainly that would be my reading.
    Mr. Hastings. Any gray area at all.
    Mr. Wright. Not that I'm aware of.
    Mr. Hastings. The independent scientific review panel 
recently looked at the Power Planning Council's fish program 
proposals for 2007 through 2009 and found many of them to be 
without any scientific method or merit. Do you have--Do we have 
adequate protections to ensure that fish and wildlife spending 
by the Council is not only cost efficient but complimentary to 
our overall efforts as well based on this.
    Mr. Wright. So I believe that we do have a reasonable 
system for making judgments about what projects we will proceed 
with. First of all, the law does require that the Council 
approve the program. The law also requires that they take the 
advice of the scientific review panel. Where they are in the 
process, it's my understanding the ISRP has provided 
recommendations but the Council has not reached its conclusions 
yet. We expect that they would take into account the data from 
that SRP.
    Beyond that, the Council provides guidance to us with 
respect to what programs we would proceed with. We tend to 
get--because we think they represent four states. And certainly 
the way the law was set up and for Bonneville to be a part of 
the region to show you this. But at the end of the day, we do 
have a decision that we need to make because we're Federal and 
we can't turn over the decisionmaking authority to a state 
body. So we also will be looking at the recommendations that 
the Council makes in light of ISRP information coming to a 
conclusion.
    Mr. Hastings. When you're trying to make long-term 
decisions and you have at least an independent review board 
that has said, boy, there's something that doesn't have 
scientific merit and, yet, decisions are based on that, it 
causes one to--especially with past history--it causes one to 
at least pause. That's why they have the cross checking, I 
guess, of these studies.
    One last question that I have, Sid mentioned that you 
occasionally call him and ask him to cut back on the power. 
Would you just elaborate on that so I can better understand why 
that comes about?
    Mr. Wright. We do try to operate the system to create 
actual value for ratepayers. The best way to do that is to try 
to avoid spill. The hydrosystem--Remember that we have a system 
that sits on the side of a very steep hill, produces a lot of 
water coming down. We can only store 30 percent of the average 
annual runoff of the Columbia, whereas, just by way of example, 
they can store 300 percent in Missouri.
    When water shows up here, we have a limited amount of 
ability to store it and use it. So there are times when like 
earlier this summer we had that--we had a pretty good snowpack 
this year and then incredibly high temperatures in June. And 
you get a lot of runoff at that point. And the goal is to try 
to maximize energy production because that's the lowest cost 
resource, while meeting our fish and wildlife responsibilities. 
So at those points it makes sense sometimes to scale back and 
use some of your thermal resources, nuclear, coal, whatever it 
might be, in order to be able to get the maximum amount out of 
the hydrosystem.
    Mr. Hastings. As I understood Sid to say, it's kind of hard 
to do that, so I just made that observation. Just out of 
curiosity, was one of those times during the summer spill last 
year.
    Mr. Wright. I can't answer that question for the record. I 
can't recall.
    Mr. Hastings. Just wondering. You know I'm very critical of 
the summer spill for what it accomplished. And if that 
happened, that could cause some problems with the nuclear plant 
and it shows how silly the whole idea of summer spill is. 
Anyway, thank you, Steve. My time's up. Thank you very much for 
your testimony and for being here. And of course your full 
statement will appear in the record.
    Mr. Wright. Thank you very much. And I will instruct Bill 
Maslen to answer any further questions.
    Miss McMorris. OK. We'll continue down the panel. Ms. 
Durham-Aguilera.

   STATEMENT OF KAREN DURHAM-AGUILERA, DIRECTOR OF PROGRAMS, 
      NORTHWESTERN DIVISION, U.S. ARMY CORPS OF ENGINEERS

    Ms. Durham-Aguilera. Aguilera like the singer. Miss 
McMorris, Mr. Hastings, I'm very pleased to be here today. I'm 
going to try to define my remarks with what's of concern here 
today. And that's the role of the hydropower system, its affect 
on power rates, its affect on people and the environment.
    The U.S. Army Corps of Engineers has several 
responsibilities. We have a responsibility to operate the 
system for multipurposes, and that's flood control, irrigation, 
navigation, hydropower, recreation, and water supply. So we 
operate for the benefits of people. We also are charged to do 
that in a cost-effective way.
    We also have a responsibility to operate the needs of 
salmon for the benefits of the environment. Significant 
investments have been made and we're seeing significant 
improvements. Adult salmon and steelhead passage and survival 
through the system is now about the same rate as the--River. 
Juvenile passage in the Snake River is--as when there were just 
four dams on the lower Columbia and Snake River. We continue to 
ensure that we keep these gains we worked so hard to get.
    So our focus on the recent passage and on improved juvenile 
passage is using a combination of bypass systems, spills, and 
the barge transport. So that also means a responsibility to be 
able to adjust, adjust to the needs of fish. Sometimes we cut 
back on power to provide spills. Sometimes we release stored 
water that we'd rather keep for recreation.
    In 2005 we came under a preliminary injunction to provide 
additional summer spill. In our 2006 operation we were able to 
do a spread the risk approach. There was a combination of about 
50 percent in river and about 50 percent in transport for 
juveniles.
    So what's our focus now? It's surface passage. If you've 
been out to Lower Granite, you've seen the spillway. We also 
are currently working on the design and construction now to 
have another RSW in place in Lower Monumental by next spring. 
And we have plans for these along the river. These are good for 
fish. They use about a third to one-fifth of the water in a 
traditional spill and costs 15 to 20 million apiece. That cost 
is quickly recovered by the energy savings.
    The Army Corps of Engineers is engaged in other nonhydro 
activities. We continue working with NOAA Fisheries, the State, 
the Tribes, especially in Oregon and Washington, to address the 
sea lions of Bonneville. This year we installed something 
called sleds at entrances to fish ladders and they keep the sea 
lions out. They work pretty well. One persistent sea lion was 
able to get through until it got too fat.
    What's our future focus? It's the regional partners working 
together in that ``all H'' approach, habitat, hatchery, 
harvest, and hydropower. The U.S. Army Corps of Engineers will 
continue to do our part and work with you, work with our tribal 
state, and other Federal partners, to find the best solutions 
for the regions. I'll be happy to take questions when you're 
ready.
    [The prepared statement of Ms. Durham-Aguilera follows:]

Statement of Karen Durham-Aguilera, Director of Programs, Northwestern 
     Division, U.S. Army Corps of Engineers, Department of the Army

    Members of Congress and distinguished guests, I am pleased to 
provide this statement addressing U.S. Army Corps of Engineers (Corps) 
activities to protect and restore Columbia River Basin salmon and 
steelhead stocks listed under the Endangered Species Act. The Corps 
appreciates the support of Congress and the Northwest delegation for 
salmon activities. The federal agencies continue to have good news to 
report on these ongoing efforts.
    The Corps and Bureau of Reclamation operate the Federal Columbia 
River Power System (FCRPS) dams in concert with Bonneville Power 
Administration (BPA) which markets power produced at the dams. Congress 
authorized the dams in the system for multiple purposes; we operate to 
provide these purposes along with our operation for protection of fish.
    The hydropower system, while a critical part of our efforts, is 
just one part of the salmon life-cycle. The federal agencies, tribes, 
states, and local interests are also making habitat improvements, 
better managing hatcheries and harvest and continuing predator control 
efforts. We have made much progress in hydro improvements, and we 
realize that further gains at the dams for adult and juvenile fish 
survival will be measured in small increments. We continue to look for 
hydropower system improvements that make biological and economic sense. 
We note that further investing in improvements to the other H's--
habitat, hatchery, and harvest--could bring bigger dividends.
    The Corps works in partnership with the other federal agencies in 
the region, and with a variety of technical and policy input from 
tribes, states, and others; salmon protection and recovery is very much 
a regional effort. Currently, in response to a court order, we are also 
engaged with Bureau of Reclamation, BPA, National Oceanic and 
Atmospheric Administration (NOAA) Fisheries Service, seven tribes and 
four states in an intensive collaboration effort. Our goal is to design 
a plan for the next ten years or so for a federal approach to salmon 
protection and recovery in the Columbia River Basin.

Adult Fish Passage and Survival at the dams
    Adult fish ladders at the dams provide good passage survival for 
adult fish returning up river to spawning areas. All of the eight Corps 
lower Columbia and Snake river dams have at least one adult fish 
ladder. Over the years we have made many improvements to the adult 
passage facilities, such as providing better ``attraction'' flows and 
current efforts to reduce stress to adult fish that are sampled for 
research.
    Through research we now know that adult survival on a per project 
basis is about 98 percent for each ``evolutionarily significant unit,'' 
or ESU, of listed salmon and steelhead migrating past the dams. In its 
2004 biological opinion on FCRPS operations NOAA Fisheries compared 
these survival results to a rate of mortality that might occur if the 
reservoirs and dams were not present and concluded that ``adult 
survival through the FCRPS is similar to survival under unimpounded 
conditions in the Snake and Columbia Rivers.''
    In recent years, technology for monitoring adult passage has 
improved, allowing us to better monitor adult passage patterns, timing 
and other fish behavior at the dams. For example, we now have adult 
Passive Integrated Transponder, or PIT, monitoring capability at 
Bonneville, McNary, Ice Harbor and Lower Granite dams. As a result of 
these improvements, we are able to make operational adjustments at 
several dams to better optimize conditions for adult migration.
    While the news on adult passage is very good, we need to continue 
to focus on a few aspects of adult passage and research. Continued 
progress means maintaining certain features such as auxiliary water 
supply systems for the fishways. Continued funding for operation and 
maintenance of fish facilities along with the BPA shared costs will be 
essential to further progress of salmon protection and recovery.
    One concern we are addressing is ``fallback,'' where adult fish 
travel back through the dam after exiting the ladder above the dam. We 
know that fish can ``fall back'' over spillways, through juvenile 
passage systems, or through turbines at the dams. The rates of fallback 
vary among species, individual dams, and with operating conditions. 
This is normal behavior for fish moving through the Columbia River, 
that is, fish move up and down various reaches before returning to 
natal streams or hatchery of origin. However, it is important that we 
minimize any adverse effects of downstream adult fish passage at the 
dams. For example, fallback at the spillways may cause injury and 
delay, resulting in reduced number of adults to spawning areas. The 
Corps looks for operational strategies that avoid fallback, such as 
prioritizing power production at the Second Powerhouse at Bonneville 
Dam before using the First Powerhouse where there is increased fallback 
through the spillway.

Pinnipeds
    Sea lion predation is another concern for adult fish migrating past 
Bonneville Dam in the spring.
    Since the early 2000's, the Corps has observed a spring migration 
of sea lions to the area below Bonneville Dam, nearly 140 miles from 
the Columbia River estuary. Generally arriving in mid- to late-
February, the predominantly male California sea lions feed on adult 
salmon, steelhead and other anadromous fish returning upriver to spawn. 
The sea lions return to Southern California for mating season in late 
May and June. The amount of fish eaten by sea lions (and other 
pinnipeds, namely, Stellar sea lions and harbor seals) increased from 
0.4 percent (1,010 fish) of the total spring salmon run in 2002 to 3.4 
percent in 2005 (2,920 fish). Corps staff observations estimated that 
some 50 to 60 fish were eaten per day by the sea lions near the dam in 
2005. Preliminary data for 2006 indicate about 2.5 percent of the 
spring salmon run, or around 2,700 fish, were consumed by the sea 
lions. The estimated number of pinnipeds for 2003, 2004 and 2005 was 
111, 105 and 87, respectively. The 2006 estimate is 85. The average 
number observed on a given day was 21 in 2005 and 27 in 2006.
    In cooperation with NOAA Fisheries and the Oregon and Washington 
fish and wildlife departments, we use a variety of harassment 
techniques--above-water pyrotechnics, underwater acoustics and others--
to discourage the sea lions.
    In 2004, for the first time, a sea lion went into a fish ladder at 
Bonneville Dam. In 2005, several sea lions entered the ladders and one 
of them, named C404, showed up in the fish counting windows. To address 
this problem we installed Sea Lion Exclusion Devices, or SLEDs, in the 
ladder entrances. The Corps worked with other regional state and 
federal agencies to design, install and test the SLEDs for use in early 
2006. The SLEDs consist of individual gates at the entrances to the dam 
fishways meant to exclude pinnipeds but allow fish passage. For the 
most part the SLEDs have proved effective, although C404 managed to get 
past them at the beginning of the season.
    Each gate is between 10 and 15 feet wide and 30 to 36 feet tall, 
and weighs over 10,000 pounds. They can be installed at the beginning 
of the sea lion ``season'' and removed when the sea lions go back to 
California.
    We will continue to work with our federal and state partners to 
address the sea lion issue.

Juvenile Fish Passage
    The bulk of investment in fish passage at the eight lower Columbia 
and Snake river dams over the past several decades has been for 
improved juvenile fish passage, mostly aimed at avoiding passage 
through the powerhouse turbines. There are three primary non-turbine 
juvenile passage routes at the dams: screened juvenile bypass systems; 
spill passage; and transport, where fish are collected at the bypass 
systems for transport by barge or truck from one of the four 
``collector'' dams (Lower Granite, Little Goose, Lower Monumental and 
McNary).
    The Corps installed screened juvenile bypass systems at seven of 
the eight dams during the 1980s and early 1990s. Following extensive 
biological evaluations, many of these facilities have undergone 
significant improvements. In the mid-1990s we began to implement spill 
to improve juvenile passage through the lower Snake and Columbia river 
dams. The combination of screened bypass systems and spill greatly 
improved juvenile survival past the dams for most populations.
    NOAA Fisheries data (see bar chart) indicates that survival for 
spring and summer Chinook traveling in-river has improved to the point 
that it is now comparable to that of the 1960s when there were only 
four dams in the lower Columbia and Snake rivers. Survival through the 
hydro system in recent years ranges from 30 to 60 percent depending on 
water conditions and other factors. In-river migrants pass the dams by 
means of the juvenile bypass systems, or through the dam spillways or 
turbines.

[GRAPHIC] [TIFF OMITTED] T8557.001


    At the four collector dams, juvenile salmon and steelhead collected 
in the bypass systems can be transferred into specially designed barges 
and trucks for transport past the remaining dams, to a release point 
downstream of Bonneville Dam. The survival rate for transported fish is 
about 98 percent to point of release, although ongoing research is 
attempting to determine any delayed effects after the fish are released 
downstream from Bonneville Dam and whether these effects can be 
minimized. The Corps has operated a juvenile fish transportation 
program since the 1970s, to reduce the number of dams and reservoirs 
juvenile fish must negotiate in their migration to the ocean.

Surface bypass systems and Removable Spillway Weirs (RSWs)
    Recent efforts to further improve in-river survival for juvenile 
fish have focused on surface oriented passage. Most juvenile salmon 
tend to stay in the upper 10 to 20 feet of the water column as they 
migrate downstream to the ocean. When approaching the dams, juvenile 
fish need to dive to depths of 50 to 60 feet to find passage routes 
such as a spillway opening or a juvenile bypass channel. For several 
years, engineers and biologists have been pursuing new technologies 
that would provide more surface-oriented, less stressful, passage 
routes for juvenile fish.
    One of the new surface passage technologies is a removable spillway 
weir (RSW), or ``fish slide,'' that fits inside a dam spillway and 
allows juvenile fish to pass near the water surface under lower 
accelerations and lower pressures. It has the potential to improve 
juvenile fish survival, save money (through decreasing spill, allowing 
more power generation), and improve water quality (by reducing gas 
supersaturation). As water is spilled over the weir, juvenile salmon 
and steelhead are carried over a raised spillway crest, similar to a 
waterslide. In tests of an RSW installed at Lower Granite Dam on the 
Snake River, juvenile fish that used the slide survived at similar or 
better rates than through a conventional spillway--about 94 to 98 
percent survival depending on test conditions--and had reduced delay 
above the dam so that they were less susceptible to predators. While 
the slide attracted about the same number of fish, only about one-fifth 
as much water was spilled. A fish slide installed at Ice Harbor Dam in 
early 2005 delivered good test results that year with 97-99 percent 
survival. Lower Monumental Dam will have an RSW by 2007 and Little 
Goose Dam is scheduled for RSW installation by 2009. We also expect to 
have a prototype weir at McNary dam by 2009.
    At Bonneville Dam on the lower Columbia River, a Corner Collector 
has been constructed at the Second Powerhouse to provide another type 
of surface passage. The ice and trash chute at the powerhouse was 
modified for safer passage, and a 2,800-foot long transport channel and 
500-foot long outfall channel were constructed. Tests in 2004 and 2005 
indicate a survival rate of nearly 100 percent for spring Chinook, 
steelhead and fall Chinook through the Corner Collector, and a 94-99 
percent survival rate, depending on the species, through all passage 
routes combined at this dam. At The Dalles Dam, a spill wall was 
completed in 2004, designed to move juvenile fish more quickly and 
safely downstream once they passed through the spillway with a two to 
four percent survival improvement. Surface passage systems and 
improvements are planned for all four of the lower Columbia River dams 
within the next several years.

Spill and Transport
    Besides making improvements at the dams, we provide operations to 
aid juvenile migration, such as spill, transport, flow augmentation 
(release of water from upstream storage dams) and cold water releases 
(to moderate temperatures in the river). When spill for fish is 
provided, water is routed through spillway openings rather than through 
turbines to generate power, or rather than being used for other 
purposes. Under biological opinions from NOAA Fisheries, the Corps has 
provided spill and juvenile fish transportation in a combination 
designed and modified to provide an optimum mix for getting the best 
return of adult fish.
    A complicating factor in operating for improved fish survival is 
that studies show various salmon species respond differently to 
different strategies. For example, the timing of fish migration and 
species of fish may make a difference as to whether the fish would fare 
better traveling in-river or in a transport barge. And there is more 
information available for some stocks of fish than for others.

Spring Spill
    Each year the Corps provides spring spill for fish at all eight 
lower Columbia and Snake river dams beginning in early April. In 2006, 
as an adaptive management action based on data from transport 
operations research, the Corps proposed to maximize transportation of 
juvenile fish in late spring to improve adult return numbers. This 
would require curtailing spill at the collector projects. However, a 
court order for 2006 operations directed full spring spill be provided. 
We are continuing research to gather more information on this issue.

Summer Spill
    Prior to 2005, the Corps did not spill at the four transport 
collector projects in summer, so that we could maximize transport of 
juvenile Snake River fall Chinook.
    In 2005, in response to a court order, the Corps provided 
additional summer spill and less transport of fish. The Corps used the 
opportunity to do additional research on fish passage survival 
including performance of the removable spillway weirs at Lower Granite 
and Ice Harbor dams. Results, as summarized in an ``after action 
report,'' indicate that ``juvenile fish left in the river during the 
spill operation showed high rates of survival at the dams through the 
Snake River and McNary dams with survival ranging from 86 percent to 96 
percent based on the results from the radio tracking studies.''
    The best available scientific information now indicates summer 
transport ``neither helps nor harms'' Snake River fall Chinook. Our 
current program for summer operations is to achieve a goal of optimum 
adult returns through two objectives: 1) manage spill and powerhouse 
operations at all eight dams for optimum juvenile fish survival past 
the dams and 2) spill and bypass collection at the collector projects 
to achieve a ``spread-the-risk'' distribution of about 50 percent 
transported juvenile fish and 50 percent in-river migrants.

Avian Predation: Caspian Terns and Cormorants
    Caspian terns and cormorants consume large numbers of juvenile 
salmon and are a major cause of mortality of ESA-listed fish. The 
program to redistribute Caspian terns from Rice Island in the Columbia 
River Estuary to East Sand Island nearer to the ocean has yielded good 
results. The intent of the redistribution was to shift the terns' diets 
away from mostly salmon and toward a wider variety of fish. Caspian 
tern predation on juvenile salmonids in the Columbia River estuary has 
been reduced from a range of 7 to15 million in 1999 to about 3.6 
million in 2005 by moving these birds downstream nearer the ocean where 
they feed less heavily on juvenile salmon and steelhead. A Tern 
Management Final Environmental Impact Statement jointly prepared by 
several agencies recommends that two-thirds of the Caspian terns be 
further redistributed across alternate sites in Oregon and California.
    The agencies are now considering management actions to address a 
greatly increased population of double-crested cormorants in the 
Columbia River estuary. The population increased from around 100 birds 
in 1989 to about 12,500 breeding pairs in 2005 nesting on East Sand 
Island. Although salmonids make up only about 5 percent of their diet, 
the cormorants consumed an estimated 6.4 million of these juvenile fish 
in 2005.

Funding of Corps fish programs
    The Corps implements a total annual program of about $140 million 
for capital improvements for fish passage and operation and maintenance 
of fish facilities.
    Construction of fish facilities and improvements to these 
facilities, and associated analysis and overhead, is funded by 
Congressional appropriations in the Columbia River Fish Mitigation 
(CRFM) project. BPA reimburses the U.S. Treasury for the ``power 
share'' of the expenses using ratepayer funds. For Columbia River Basin 
salmon and steelhead capital expenditures, this averages about 80 
percent of the total. The power share of operations for fish and 
maintenance of fish facilities is direct-funded by BPA; Congressional 
appropriations provide the 20 percent matching funds. In 2006, $33 
million was direct funded for this purpose. In 2006, the Corps was 
appropriated about $11 million for this purpose.
    The CRFM project was initiated in 1988 to focus efforts on 
improving fish passage systems at the eight lower Columbia and Snake 
river dams, as part of the continuing mitigation for construction of 
the dams. Many successful improvements to dam fish passage have been 
made since, and many more are being studied and implemented. The 
estimate to complete this project is approximately $1.6 billion; by the 
end of FY05 about $1 billion had been spent.
    The Corps has completed numerous individual projects under CRFM. 
These include major improvements to the juvenile fish bypass systems at 
seven dams such as extended length bypass screens; juvenile fish 
monitoring capability at Bonneville, John Day and Ice Harbor dams; 
Removable Spillway Weir surface passage at Lower Granite and Ice Harbor 
dams; Bonneville Dam Second Powerhouse Corner Collector for juvenile 
fish passage; adult Passive Integrated Transponder (PIT) tag detection 
facilities at several dams; and spillway flow deflectors at most dams. 
Considerable research on fish passage has also been completed, as well 
as evaluation of long term configuration and operation options such as 
the Lower Snake River Juvenile Salmon Migration Study which looked at 
breaching the four lower Snake River dams.
    About $40 million annually is expended for operation and 
maintenance of juvenile and adult passage systems, and operation of the 
Juvenile Fish Transportation Program. Operation and maintenance is 
critical for providing reliable adult and juvenile passage.

Summary
    Thank you for the opportunity to provide an update on the progress 
we have made for fish survival and recovery in recent years. The dams 
in the Columbia River Basin provide many benefits to the region, 
including flood control, navigation and power, but there are trade-
offs. As the Federal stewards of these benefits, we recognize our 
tremendous responsibility to continue to work with the region to find a 
way forward that is good for the fish and for people. We believe the 
current life-cycle approach to salmon protection and recovery, with a 
region-wide effort to address habitat, hatcheries, harvest and 
hydropower impacts, is the best approach for bringing these fish back 
to sustainability. The Corps will continue to do its part, and work 
with you, the relevant Federal agencies and entities, and with the 
region to find the best balance and provide the best results.
                                 ______
                                 
    Miss McMorris. Very good. Thank you for being here. Ms. 
Hirsh.

          STATEMENT OF NANCY HIRSH, POLICY DIRECTOR, 
        NORTHWEST ENERGY COALITION, SEATTLE, WASHINGTON

    Ms. Hirsh. Good morning. Thank you for the opportunity to 
testify before you today. The Energy Coalition is an alliance 
of more than 100 consumer, environmental, faith-based and low-
income groups, unions, and electric and gas utilities from the 
four Northwest states and British Columbia, all working toward 
a clean and affordable energy future.
    [Discussion held off the record.]
    Ms. Hirsh. The Columbia River houses and helps make the 
Northwest what it is today, providing low-cost 
hydroelectricity, a river highway for transporting goods, 
irrigation, and recreational opportunities. This share of 
natural resources deserves a better balance between 
hydroelectric operations and salmon recovery than we have to 
date. More, not less, should be done to balance the scales.
    We can achieve salmon recovery without losing our 
competitive edge in the electricity industry. We can and should 
achieve this balance because we are all stewards of the 
Columbia River system. It's important to make clear that 
Federal taxpayer and electricity ratepayer investments in 
salmon recovery are not made in a vacuum. These dollars are put 
to work helping to sustain and rebuild a very important asset 
in the Northwest economy.
    Sport fishing is a multi-billion dollar industry in the 
region and currently supports about 36,000 family wage jobs. 
Commercial fishing contributes about $84 million a year to 
economically strapped coastal communities. Smart investments in 
salmon recovery simply makes economic sense for the entire 
region.
    Too often balancing salmon and low-cost energy is portrayed 
to the public as a tradeoff. The perception is that we cannot 
have our cake and eat it too. Yet the Northwest need not make 
that difficult choice. The rate increases resulting from the 
energy crisis were not in any way due to increased fish and 
wildlife investments.
    According to the General Accounting Office, BPA's recent 
rate hikes were the result of its commitment to provide more 
power than it could generate during the West Coast energy 
crisis and drought of 2001. BPA should be commended for the 
aggressive steps the agency has taken to get us out of the red.
    Though the effects of 2001 are still lingering, BPA's rates 
have come back down. This is good news and a credit to our 
ability to balance salmon and energy that even with increased 
salmon recovery measures like spill, BPA has still been able to 
keep electricity rates affordable and competitive.
    BPA's proposed rates for the Fiscal Year '07 and '09 rate 
period will be around $28 a megawatt hour. I should note that 
wholesale market prices are about $45 a megawatt hour. And, 
clearly, the Northwest still enjoys among the lowest 
electricity rates in the country, even with salmon recovery 
efforts. Our electricity raises the envy of other parts of the 
U.S., and that's something to be proud of.
    Would we be able to lower rates if not for salmon recovery 
operations? Without a doubt. We could also eliminate the 
residential exchange program for customers that invest in our 
utilities, or eliminate all sales to the aluminum industry. 
Those cost savings would certainly lower rates faster.
    But these are not choices within our power to make, nor are 
they choices that would aid the Northwest economy as a whole. 
As the coalition endures low-income community and consumer 
organizations as members, we are very aware of the sensitivity 
to rising energy costs and the effects on the general and on 
financially constrained low and fixed income families in 
particular.
    This region has an abundance of resources such as energy 
efficiency, wind, and biomass that can help keep rates low, 
while at the same time provide more flexibility for salmon 
recovery. Energy efficiency and conservation reduces consumers' 
bills immediately, and everyone's does over time. Both energy 
efficiency and new renewable resources protect consumers 
against the volatility of fossil fuels, recurring water 
shortages, and any future costs related to carbon dioxide 
emissions.
    These low-cost resources can meet the low growth we have in 
the region, thereby, reducing pressure on the Columbia River 
hydrosystem to generate more power.
    Finally, I'd like to say a quick word about H.R. 4857. Our 
coalition has testified on this bill before, so I'll be 
especially brief. In general, the Energy Coalition believes the 
transparency of BPA's cost is a laudable goal. More access to 
information is always the right goal, but there must be full 
and honest accounting to inform the public properly. We do not 
believe that 4857 would ensure that fair accounting. The most 
open aspect of this legislation is that it would modify the 
inclusion of indirect costs.
    BPA does not own the river. It shares the river with all 
other users like the Tribes and sport and commercial fishermen.
    In conclusion, the Northwest has reasonable electricity 
rates. Would we like to lower them more? Who wouldn't? But what 
we don't have is a healthy sustained wild salmon. We need to do 
more to achieve balance. I hope that the region will approach 
the question of balance and low-cost energy, the question of 
balance between low-cost energy and salmon recovery with a 
broader perspective. We can have a win-win solution by 
effectively balancing affordable electricity bills and salmon 
recovery. Thank you very much.
    [The prepared statement of Ms. Hirsh follows:]

     Statement of Nancy Hirsh, Policy Director, NW Energy Coalition

    Mr. Chairman and distinguished members of the subcommittee, thank 
you for the opportunity to testify before you today. My name is Nancy 
Hirsh and I am the policy director of the NW Energy Coalition. The NW 
Energy Coalition is an alliance 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 on an issue that goes to the very identity of the 
Pacific Northwest: affordable electricity and wild salmon.
    The Pacific Northwest has been blessed with something that no other 
region can call its own: the Federal Columbia River Power System. This 
system of 31 dams throughout the Columbia River Basin has helped make 
the Pacific Northwest what it is today, providing low cost 
hydroelectricity, a river highway for transporting goods, irrigation, 
recreational opportunities, and more. Since the construction of the 
very first federal dam on the Columbia, we as a region have attempted 
to balance the benefits of that system. It is a ``multiple use'' system 
and inherent in that definition is managing trade-offs on both benefits 
and impacts.
    But the bounty of the federal system does not come to us for free. 
No one would argue that the construction and operation of dams along 
the Columbia and Snake rivers hasn't had a profound effect on our 
cherished wild salmon and steelhead runs. My testimony today asserts 
that we can and should find a better balance between hydroelectric 
operations and salmon recovery than we have to date. But unlike many on 
today's panel, I believe it is on the salmon side where more, not less, 
should be done to balance the scales. I also believe we can achieve 
salmon recovery without losing our competitive edge in the electricity 
industry. This is our obligation, and our burden, as stewards of the 
Federal Columbia River Power System (FCRPS).
Summary
      Salmon are a linchpin of the Pacific Northwest economy
      Energy vs. salmon is a false and unnecessary choice
      Clean energy investments can help us achieve both
      Higher-than-normal BPA rates are not the fault of salmon 
recovery
      The Energy Coalition supports BPA cost transparency, but 
H.R. 4857 is the wrong approach
I. The Economic Importance of Salmon Recovery
    We all know the economic significance of affordable electricity 
rates for everyday consumers, businesses, and others. But a ``working 
river,'' as the Columbia is often called, does more than just provide 
affordable energy. I'd like to focus briefly on something that is not 
as well known and less well understood: the economic significance of 
salmon recovery.
    According to the Northwest Sportfishing Industry Association, 
sportfishing alone is a multi-billion dollar industry and currently 
supports about 36,000 family wage jobs in the Pacific Northwest. 
1 Stretching far beyond tackle and fishing license sales, 
recreational fishing involves both direct spending on rods, reels, 
boats, tackle, etc., and significant indirect spending, such as travel 
expenses in and around river and coastal communities. This economic 
input ripples through local communities, helping to foster jobs, 
economic stability and growth.
---------------------------------------------------------------------------
    \1\ Testimony of Liz Hamilton, Executive Director, Northwest 
Sportfishing Industry Association, before the U.S. House of 
Representatives, Subcommittee on Water and Power, Field Hearing, 
Clarkston, WA, June 6, 2005.
---------------------------------------------------------------------------
    Commercial fishing is another important economic outgrowth of 
salmon recovery. According to the independent economic arm of the 
Northwest Power and Conservation Council, commercial fishing 
contributes about $84 million per year in personal income alone to 
economically strapped ocean communities in the Northwest. 2 
And all this comes at a time when fishing opportunities are severely 
constrained by low salmon returns. These benefits will multiply 
exponentially when, and if, salmon are recovered to self-sustaining, 
harvestable populations.
---------------------------------------------------------------------------
    \2\ Independent Economic Analysis Board, Economic Effect from 
Columbia River Basin Anadromous Salmonid Fish Production, January 2005. 
(Document IEAB 2005-1)
---------------------------------------------------------------------------
    That's why the NW Energy Coalition strongly believes that smart 
investments in salmon recovery simply make economic sense for the 
Pacific Northwest.
II. The False Choice Between Salmon and Low-Cost Energy
    Too often, balancing salmon and low-cost energy is portrayed to the 
public as a dichotomy. The perception is that we cannot have our cake 
and eat it too. However, the Pacific Northwest need not make that 
difficult choice. We can have both salmon and low-cost energy, and we 
hope everyone in the room today agrees with that point.
    In fact, taking a step back and looking at this issue from a 
national perspective, one can make a strong argument that the scales 
are currently heavily tipped in favor of low-cost energy. If true 
balance is to be achieved, perhaps it's time to do more, not less, for 
our imperiled salmon populations.
    The fact of the matter is that the Pacific Northwest currently 
enjoys among the lowest electricity rates in the country, thanks in 
large part to the benefits of the FCRPS. The Bonneville Power 
Administration's (BPA) wholesale preference rates are currently 59 
percent below the market rates that BPA 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. 3 
BPA just established firm wholesale power rates at $27.50 per 
megawatthour for FY07-09 rate period. Market based wholesale firm power 
contracts are $45-55 per megawatthour.
---------------------------------------------------------------------------
    \3\ Declaration of Roger Schiewe of BPA, in National Wildlife 
Fed'n, et al, v. NMFS, et al., spreadsheet entitled ``River Ops, 
Genesys,'' November, 2005.
---------------------------------------------------------------------------
    It is critical to point out that these comparisons include all of 
the current fish and wildlife costs and impacts on BPA power 
operations. Clearly, our energy rates are higher now than in the past, 
and the Coalition supports BPA's efforts to find cost savings that do 
not jeopardize the long-term stability of the agency. We hope our rates 
will remain under market rates. But even with fish and wildlife costs 
included, BPA power is significantly below market rates, and is, in 
truth, the envy of other parts of the country. That's something to be 
proud of. Business leaders and farmers from California or New York, 
where energy prices are through the roof, might wonder what all the 
fuss is about.
    We have reasonable electricity prices. What we do not have is 
healthy, self-sustaining wild salmon, and we have a long way to go 
before reaching that goal.
III. Clean Energy Can Help Bridge the Gap
    I share the concerns about rising energy costs and their effects on 
our region's economy in general and on financially constrained low- and 
moderate-income families in particular. Fortunately, I believe that 
there is a solution that can help keep rates low while at the same time 
providing more flexibility for salmon recovery: investments in cost-
effective energy efficiency and non-hydro renewable power.
    Investments in energy conservation programs may increase rates 
slightly, but would reduce consumers' actual bills immediately and 
everyone's bills over time. The Northwest Power and Conservation 
Council's Fifth Power and Conservation Plan identifies 2,500 average 
megawatts of energy conservation potential in the region at an average 
cost of 2.4 cents per kWh. 4 The Council also says that if 
the region does not capture these energy savings, we will lose $2.4 
billion in economic benefit over the next 20 years. 5
---------------------------------------------------------------------------
    \4\ Northwest Power and Conservation Council, The Fifth Northwest 
Electric Power and Conservation Plan, May 2005. (Council Doc. 2005-7)
    \5\ Id.
---------------------------------------------------------------------------
    Likewise, renewable energy not only protects consumers against the 
easily seen volatility of fossil-fuel resources and inevitably 
recurring water shortages, but also against the coming penalties/fees 
on carbon dioxide emissions. To protect consumers from the financial 
impacts of these uncertainties, BPA needs to facilitate and support 
renewable energy opportunities.
    The NW Energy Coalition thanks BPA for proposing to meet the 
Council's energy efficiency targets, but we believe BPA's energy 
efficiency goals should be higher and remain concerned about whether 
the needed investments will be made. This is an opportunity that the 
region cannot afford to pass up.
IV. Higher Than Normal Electricity Rates Aren't Due to Salmon Recovery
    Again, looking at this issue from a broad perspective, it becomes 
abundantly clear that higher than normal electricity rates in the 
Northwest are not in any way due to increased fish and wildlife 
investments. Obviously, salmon recovery has an impact on rates, but not 
nearly to an extent that is beyond the burden we must bear to maintain 
the benefits of the FCPRS in the Pacific Northwest.
    In a report to the House Appropriations Subcommittee on Energy and 
Water, the U.S. Government Accountability Office (GAO) found that the 
major cause of BPA's recent cost increases was the agency's ``open-
ended obligation to be the net provider of wholesale power to the 
region'' at a time when the 2001 west coast energy crisis and a serious 
drought was about to hit. 6 This obligation, along with 
significantly increased customer demand, ``led to BPA's overcommitment 
to provide power to its customers in the current rate period--from 
Fiscal Years 2002 to 2006--and consequently, to BPA's cost increases as 
it purchased large amounts of power at average prices much higher than 
the costs of the federal power system.'' 7 As a result, BPA 
spent approximately $900 million in Fiscal Year (FY) 2002 and $760 
million in FY 2003, necessitating a rate increase of more than 40 
percent for the majority of BPA's customers. 8
---------------------------------------------------------------------------
    \6\ United States Government Accountability Office, Report to the 
Subcommittee on Energy and Water Development, Committee on 
Appropriations, House of Representatives, Bonneville Power 
Administration: Better Management of BPA's Obligation to Provide Power 
Is Needed to Control Future Costs, July 2004. (GAO-04-694)
    \7\ Id.
    \8\ Id.
---------------------------------------------------------------------------
    The effects of 2001 are still lingering, though BPA should be 
commended for the steps the agency has taken to get us out of the red. 
The agency's mid-year forecast this year shows revenues about $250 
million over the start of the year projections, bringing BPA close to 
breaking even for the mistakes of the past. 9
---------------------------------------------------------------------------
    \9\ Bonneville Power Administration, News Release: BPA mid-year 
forecast shows higher revenues; Agency regaining financial strength, 
May 1, 2006.
---------------------------------------------------------------------------
    Would we be able to make up more ground faster if not for salmon 
recovery obligations? Without a doubt. We could also eliminate the 
residential exchange program for customers of investor-owned utilities 
or eliminate all sales to the aluminum industry. Those cost savings 
would certainly lower rates faster. But these are not choices within 
our power to make, nor are they choices that would aid the Pacific 
Northwest economy as a whole.
    The point is that we are moving in the right direction. It is good 
news, and a credit to our ability to balance salmon and energy, that 
even with increased salmon recovery measures like ``spill,'' BPA has 
still been able to keep electricity rates affordable and competitive. 
In fact, in 2005, only eight days after the end of the court-ordered 
summer spill period, BPA announced that it would be reducing its 2006 
wholesale power rates by nearly 2 percent. 10
---------------------------------------------------------------------------
    \10\ Bonneville Power Administration, News Release: BPA announces 
wholesale power rate decrease, September 8, 2005.
---------------------------------------------------------------------------
    Despite all the rhetoric and political jockeying, salmon recovery 
obligations are not the most significant driver of BPA's fiscal health. 
These obligations, which we are required to meet by federal law, 
represent just a small fraction of BPA's overall $3.3 billion budget.
    Nevertheless, I take rising electricity costs seriously, and I am 
not here today to argue that all is fine and dandy in the world of 
Northwest energy. Higher-than-normal electricity and natural gas rates 
have a real impact on consumers, particularly on low-income families. 
The NW Energy Coalition has long supported increased investments in 
low-income weatherization and we thank BPA for increasing its 
commitment to this program to $5 million. We urge you to support the 
full $5.1 billion annual authorization in the Energy Policy Act of 2005 
for the Low Income Home Energy Assistance Program for 2007 and 2008.
V. H.R. 4857 is Not the Answer
    Finally, I'd like to say a word about H.R. 4857, the Endangered 
Species Compliance and Transparency Act of 2006. Sara Patton, executive 
director of the Coalition, appeared before the Committee on Resources 
in March of this year to outline our concerns with this legislation. 
11 I will briefly restate portions of her testimony here.
---------------------------------------------------------------------------
    \11\ Testimony of Sara Patton, Executive Director, NW Energy 
Coalition, before the U.S. House of Representatives, Committee on 
Resources, Regarding H.R. 4857, the Endangered Species Compliance and 
Transparency Act of 2006, March 16, 2006.
---------------------------------------------------------------------------
    In general, the Energy Coalition believes that transparency of 
BPA's costs is a laudable goal, but there must be a full and honest 
accounting to inform the public properly. H.R. 4857 raises a number of 
concerns because we do not believe it would ensure that fair accounting 
for the following reasons:
      The 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 Endangered Species Act 
(ESA) costs would be difficult or impossible.
      Proposals to include foregone revenue in these costs 
imply that BPA can claim savings for violating federal laws, and that 
BPA owns the Columbia and Snake Rivers.
      Meaningful economic transparency should address both 
costs and benefits. H.R. 4857 only examines perceived costs.
      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.
    I'd like to focus specifically on one aspect of this legislation: 
the requirement that BPA and other Power Marketing Agencies include 
``foregone generation'' as indirect costs in their Endangered Species 
Act-compliance calculation (Section 2'').
    ``Foregone revenue'' in this context refers to 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. Requiring 
that BPA consider 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, and 
H.R. 4857 would set a dangerous precedent by codifying it in federal 
law.
    BPA already readily reports its foregone revenue due to fish and 
wildlife obligations. Unfortunately, doing so grossly distorts the 
actual monetary contribution BPA expends on salmon recovery, amounting 
to over 50 percent of the agency's fish and wildlife investments (if 
foregone revenue can properly be deemed an investment). BPA does not, 
however, report any of the other various revenues that the agency 
foregoes, such as those associated with meeting other legal constraints 
on power generation like 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 FCRPS's ability to generate electricity and reduce 
BPA's potential revenue. Hence, to be consistent, BPA would need to 
count them as ``costs'' as well.
    In fact, it is difficult to draw a clear line between what does and 
does not constitute ``foregone revenue,'' if one looks beyond the uses 
of Columbia Basin water. For example, BPA currently makes annual 
payments totaling hundreds of millions of dollars for failed nuclear 
plants that were never constructed. Using BPA's logic, shouldn't these 
payments be considered ``foregone revenue'' because every penny spent 
is a penny that cannot be applied to a reduction in rates?
    The truth is that BPA does not ``own'' the water used for spilling 
salmon past the dams. BPA shares the river with all 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. Including 
foregone revenue in the calculation would open a Pandora's box that 
would be better left closed. The NW Energy Coalition recommends that 
Sec. 2(c) be deleted from the bill.
VI. Conclusion
    In conclusion, I hope that the Pacific Northwest as a region will 
take a step back and start approaching the question of balance between 
low-cost energy and salmon recovery from a broader perspective. We are 
blessed in this region as the sole beneficiaries of the FCRPS. As the 
stewards of this federal system, we have a moral and legal obligation 
to keep healthy, wild salmon in our rivers for future generations of 
Northwest families, and for the nation as a whole. Salmon recovery is a 
part of that responsibility, but it is also a tremendous benefit. 
Salmon recovery obligations do not now, and will not in the future, 
pose a threat to affordable electricity.
                                 ______
                                 
    Miss McMorris. Thank you. Ms. Flores.

             STATEMENT OF TERRY FLORES, DIRECTOR, 
           NORTHWEST RIVERPARTNERS, PORTLAND, OREGON

    Ms. Flores. Good morning. I'm Terry Flores, Executive 
Director of Northwest RiverPartners, and I want to thank both 
of you for the opportunity to come and comment today. I'm going 
to talk a little bit about RiverPartners and our efforts to 
work collaboratively on a new biological opinion. And then I do 
want to describe for you why we so strongly support the 
legislation, H.R. 4857.
    So, first, RiverPartners is a nonprofit association. We 
represent a broad coalition in the Pacific Northwest that 
includes agricultural interests, utilities, both public and 
private, industries, and ports.
    This hearing today couldn't be more relevant to my members 
and our mission. We want to find solutions that will preserve 
the multiple uses of the Columbia and Snake Rivers for regional 
businesses and families, while also promoting efficient, cost-
effective salmon protection and recovery.
    RiverPartners' mission is fourfold. It is about finding 
salmon solutions that are, one, achieved via collaboration and 
not controversy; two, are based in sound science not advocacy 
science; three, are cost effective with demonstrable benefits 
for fish and are focused on salmon protection and recovery and 
not salmon rhetoric.
    To accomplish this mission, we do not need to bankrupt the 
region, nor do we need to remove dams as some on the fringes 
continue to suggest. We do need, however, to ensure that a 
comprehensive approach is taken to salmon recovery, one that 
includes all aspects of the salmon's life cycle and addresses 
habitat, harvest, hatcheries, and hydro. You've already heard 
this morning from a couple of witnesses that the hydrosystem is 
reaching its limitations.
    To that end, RiverPartners is working very hard to bring 
people together to reach reasonable, timely, and workable 
solutions. We're currently involved in the effort to develop a 
new biological opinion, working through a regional coalition. 
That coalition includes the states of Washington, Montana, and 
three up-river Tribes, the Spokanes, the Colvilles, and the 
Kootenai Tribe in Idaho.
    The Coalition's fundamental goal is to remove this enormous 
cloud that's hanging over the region right now with continuing 
litigation and in essence having a Federal judge opine how to 
run the hydrosystem and what's best for fish. Our goal is to 
try and see that new biological opinion gets to them and works 
with the salmon and the economy.
    You've already heard this morning quite a bit on the cost 
associated with salmon recovery. I want to tell you that 
RiverPartners' prime concern is how those dollars are being 
spent and will be spent. Frankly, recognizing that we're going 
to be making significant investments in salmon recovery, we 
want to make sure that dollars are well spent. We want 
accountability, and we want demonstrable results in terms of 
fish benefits.
    You've also already heard this morning that the majority of 
Bonneville's costs are related to river operations, 
specifically providing for fisheries down to the migration 
period. You've heard that those costs--summer spill is an 
example of that. $75 million was spent. And if you read the 
Federal agency's after action report, there were not a lot of 
fish. So summer spills clearly are bad policy, very expensive, 
didn't provide a lot of benefits for the fish.
    But I do want to mention that there are some very good 
examples of how well dollars are being invested. For example, 
the fish line at Lower Granite and Ice Harbor Dam. They're 
expensive but they're very effective. They're delivering an 
estimated 97 to 99 percent survival for spring migrating and 
spilling water two to three times less.
    A new corner collector device at Bonneville Dam passed 7.6 
million fish at a fraction of the cost of spilling water. The 
reality is the region has invested hundreds of billions of 
dollars in salmon recovery, and I think we are beginning to see 
some very solid results.
    You've heard from Steve Wright that adult salmon in 
steelhead survival is 98 percent or higher at each one of the 
dams. That's a result of having made improvements. And despite 
earlier reports that salmon returns would be low this year, 
returns are actually looking pretty good.
    So, clearly, the costs associated with salmon protection 
are great and the stakes for fish and the economy are high. We 
think it's important and fair for Northwest businesses and 
utility customers to understand the situation. That's why we 
strongly support H.R. 4857. Utilities and their customers 
should have an opportunity to know and understand the ongoing 
investment that they're making recovering salmon and steelhead. 
The fact of the matter is that people in the Northwest care 
deeply about these resources, and I believe they would 
appreciate knowing that they're making a substantial 
contribution, they're doing their part to protect these 
species.
    We also support H.R. 4857 because more information and 
knowledge about the ESA will lead to better informed utilities, 
their customers, and the general public. And, ultimately, what 
we hope is better accountability for costs and how they're 
being incurred.
    Congresswoman McMorris had already mentioned in her 
comments that people are very unaware in the Northwest what 
they're spending. That information actually came from a poll 
RiverPartners conducted in May of 2005, where we found over 70 
percent of the respondents were not aware or thought they spent 
5 percent or less on ESA and salmon costs. The reality is, 
depending on the serving utility, it's more on the order of 15 
or 20 percent.
    So, in closing, we support the legislation. We think it's 
good public policy. Our hope is that such knowledge will help 
spark greater ownership and accountability over the investments 
that are being made. We believe in the region that for true 
collaboration the region does have the opportunity to invest 
dollars more wisely and hopefully develop a new biological 
opinion that will work for the fish and the economy.
    [The prepared statement of Ms. Flores follows:]

           Statement of Terry G. Flores, Executive Director, 
                        Northwest RiverPartners

    Congressman Hastings and Congresswoman McMorris, members of the 
Committee, my name is Terry Flores, and on behalf of Northwest 
RiverPartners I thank you for the opportunity to testify today in favor 
of H.R. 4857. Northwest RiverPartners is a non-profit association that 
represents a broad coalition of river users in the Pacific Northwest 
including agricultural interests, utilities, industries, and ports. Our 
100-plus members are dramatically affected by current efforts in the 
region to recover listed endangered salmon and steelhead, through power 
rates and changes to river operations.
    This hearing today couldn't be more relevant to my members and our 
mission. We are committed to finding and achieving an appropriate 
balance between the region's economy and salmon recovery efforts. We 
want to find solutions that will preserve the multiple uses of the 
Columbia and Snake Rivers for regional businesses and families, while 
also promoting efficient, cost-effective salmon and steelhead 
protection and recovery. During the on-going public debate about salmon 
recovery, little attention has been paid to the tremendous economic 
force of the Columbia and Snake rivers and the quality of life that 
they provide, which oftentimes is taken for granted.

Northwest RiverPartners Mission
    RiverPartners' mission is fourfold. It is finding salmon solutions 
that are: 1) achieved via collaboration not controversy; 2) based in 
sound science not advocacy science; 3) cost-effective with demonstrable 
benefits for fish; and, 4) focused on salmon protection and recovery, 
not salmon rhetoric. To accomplish this mission, we do not need to 
bankrupt the region, nor do we need to remove dams as some on the 
fringes continue to suggest.
    We do need to ensure that a comprehensive approach is taken to 
salmon recovery, one that includes all aspects of the salmon's 
lifecycle. You can't fix one link in a chain while others are broken 
and expect the chain to hold together. Significant efforts also must be 
undertaken in the habitat, harvest and hatchery arenas. It will take 
sincere collaboration and a willingness to explore these issues 
seriously, in addition to making further improvements in hydrosystem 
operations, for the salmon to be on a solid path to recovery.
    To that end, RiverPartners is working hard to bring people together 
to reach reasonable, timely and workable solutions. Currently, we are 
very involved in the effort to develop a new Biological Opinion (BiOp) 
on federal hydrosystem operations, working closely with a ``Regional 
Coalition'' that includes the states of Washington, Montana, and 
upriver tribes: the Spokanes, the Colvilles and the Kootenai Tribe of 
Idaho.
    The Coalition's common goal is to help ensure development of a new 
BiOp that is: based in sound science and uses science to resolve issues 
of key uncertainty, provides real benefits to listed salmon and 
steelhead as quickly as possible, maintains the viability of the 
federal hydrosystem, and withstands legal challenge. A very tall order.
    However, we believe that through collaboration such as ours, with a 
respectful sharing of information and ideas, there is great opportunity 
for this new BiOp effort to be successful. It is critical that it be 
successful. Otherwise, the huge cloud of uncertainty that hangs over 
the region will continue. There will be continued litigation and a 
federal Judge deciding how to run the hydrosystem and what's best for 
the fish. Such uncertainty is bad for the economy and bad for the fish. 
Attorneys and consultants may benefit and it may serve as a valuable 
fundraising tool for some organizations, but clearly the salmon will 
not be saved in a courtroom.

Fish and Wildlife Costs and Benefits
    On the costs associated with salmon recovery, RiverPartners' prime 
concern is about how dollars are currently being spent, and will be 
spent. For example, over $750 million annually is being invested by 
Bonneville Power's customers, about 25 percent of BPA's wholesale power 
costs. We want to ensure that what is being spent is well-spent. We are 
about accountability. We need demonstrable results in terms of fish 
benefits for dollars spent. We are about helping listed fish, not 
propping up various economic development projects, paying agencies' 
overheads or doing research projects because they make someone feel 
good.
    If we are to truly solve the problem long-term, we must ensure that 
our dollars are being invested in those measures that will provide real 
benefits. Currently, the majority of BPA's fish costs are related to 
river operations, specifically providing additional flows and spills 
for fish during the downstream migration period, resulting in lost 
energy to the region.
    We have learned that those costs can be huge, with uncertain 
benefits for the fish. For example, based on the federal agencies' 
October 31, 2005 ``After Action Report'' last year's summer spill 
program, ordered by Judge Redden, ran from June 20 to August 31st cost 
regional energy customers and businesses nearly $75 million dollars. 
Yet, according to the report: ``a considerable portion of the 2005 
run...had already passed the Snake River dams by June 20'', and 
``nearly all of the Snake River Fall Chinook fish passed (the Snake 
River dams) by July 31''.
    Summer spill clearly is a good example of a bad policy: it was very 
expensive and did little or nothing to help endangered fish. It also 
did nothing to advance the region's understanding or the science to 
help resolve the debate over the best way to aid fish in their 
downstream migration--transportation vs. spill. RiverPartners, together 
with the Regional Coalition, supports implementing a comprehensive, 
multi-year (and no doubt very expensive study) to determine whether 
listed species are better off being transported or spilled, what 
species, and when. It is our understanding that such a study will be 
pursued.
    That said, there are a number of examples where dollars are being 
invested to very good effect. For example, ``fish slides'' at Lower 
Granite and Ice Harbor dams, while expensive, are proving very 
effective, delivering an estimated 97-99 percent survival for spring 
migrants while spilling two to three times less water. A new ``corner 
collector'' device passed 7.6 million hatchery fish from the Spring 
Creek Hatchery this year at a fraction of the cost of spilling water. 
The collector, in conjunction with the screened bypass system at the 
dam, passed fish with a survival rate of over 99 percent. It is 
examples like these that are leading to these good results:
      Adult salmon and steelhead survival is 98 percent or 
higher at each dam as a result of improvements made to passage 
facilities over the last several years;
      Despite earlier reports that salmon returns would be low 
this year, adult returns for all species were impressive. In fact, 
returns were near the 10-year average which includes years of record 
and near record high returns from 2000 through 2004.

H.R. 4857--Providing Valuable Information
    Clearly, the costs associated with salmon protection are great and 
the stakes for fish and the economy are high. RiverPartners believes it 
is important and fair for Northwest businesses and utility customers to 
understand the situation. That is why we strongly support H.R. 4857. 
Utilities and their customers should have the opportunity to know and 
understand the ongoing investment they are making in recovering listed 
salmon and steelhead. People in the Northwest care deeply about their 
natural resources, particularly their fish and wildlife. They would 
appreciate knowing that they are making a substantial contribution, are 
doing their part to protect and recover these valued resources.
    We also support H.R. 4857 because more information and knowledge 
about the ESA will lead to better informed utilities, customers and the 
general public and, ultimately, we hope, better accountability for 
costs and how they are incurred. Knowledge is power--power to make 
better decisions and put dollars where they will do the most to benefit 
the fish. We need to shine a light on the investment being made in 
salmon recovery. Some respond that fish and wildlife costs should not 
be singled out. We believe ESA costs warrant special mention because 
they are of great magnitude, are subject to great volatility, and, 
again, people in the Northwest deserve to know they are making a 
significant investment in recovering salmon stocks.
    Further, this legislation is needed. Northwest RiverPartners, in a 
public opinion survey conducted in May 2005 in Washington, Oregon and 
Idaho, learned that nearly 60 percent of respondents were not even 
aware that ESA compliance costs were included in their power rates. Of 
those who were aware, over 40 percent believed that less than 5 percent 
of their bills went to such compliance. The reality is, depending on 
the serving utility, 15 to 20 percent or more of consumers' retail 
bills go toward ESA compliance, specifically for listed salmon and 
steelhead.

Conclusion
    Northwest RiverPartners supports H.R. 4857 because it is good 
public policy. The costs regional electricity customers are investing 
in salmon recovery are significant and they deserve to be aware of 
that. Our hope is that such knowledge will help spark greater ownership 
and regional discussion over what investments are being made and 
whether they are the ones that will provide the greatest benefits to 
resources of concern. It is irrelevant whether people believe the 
``right'' amount is being spent in the region of fish and wildlife and 
ESA compliance. The point of H.R. 4857 is to provide knowledge and 
information. Those making the investment deserve no less.
    Thank you very much for the opportunity to comment today.
                                 ______
                                 
    Miss McMorris. Thank you. Ms. Miles.

 STATEMENT OF HON. REBECCA MILES, COMMISSIONER, COLUMBIA RIVER 
INTER-TRIBAL FISH COMMISSION, PORTLAND, OREGON; ACCOMPANIED BY 
                           ED SHEETS

    Ms. Miles. Good morning, Congressman Hastings and 
Congresswoman McMorris. My name's Rebecca Miles. I'm Chairman 
of the Nez Perce Tribe. And I'm here representing the Columbia 
River Inter-Tribal Fish Commission, otherwise known as CRITFC. 
And the Confederated Tribes of the Warm Springs Reservation is 
also here today. We thank you for this opportunity to provide 
testimony.
    CRITFC consists of the four Tribes of the Treaty Reserved 
Fishing Rights on the Columbia River, Yakama Nation, 
Confederated Tribes of the Umatilla Indian Reservation, 
Confederated Tribes of the Warm Springs Reservation, and the 
Nez Perce Tribe.
    We have had a seat at the Columbia River table for over 
10,000 years. Salmon was so fundamental to our society that 
when sovereign tribes would not negotiate a treaty in 1855, our 
tribal forefathers explicitly reserved, and the government 
agreed to assure, our right to take fish caught on our 
ancestral homeland, which stretches across one-third of the 
entire Columbia Basin in Washington, Idaho, and Oregon.
    We've kept our word by feeding back portions of our 
homeland to the United States and have always fully expected 
the government to honor their word. We all share a goal for a 
healthy environment and access to affordable electricity. It's 
important that we develop a fundamental strategy between the 
relationship of electricity costs and the Federal obligation to 
restore healthy salmon runs under treaties as well as under the 
ESA and the Northwest Power Act.
    I have tempered optimism. Since I last spoke with this 
Subcommittee, our Tribes along with the Northwest States and 
Federal agencies have been involved in a collaborative effort 
to construct a salmon recovery plan for the Columbia River 
Basin. It's our goal to deliver a plan that can win regional 
support and be put into practice immediately with hallmarks I 
think you would support, certainty and accountability.
    In our view, the element most crucial to success or failure 
and lacking from the previous salmon plan is sufficient 
funding. I appeal to you to work with the collaboration 
partners to ensure that all the needed ingredients for a 
successful salmon plan are realized.
    Anxiety stirred by State and Federal expenditures for 
fishery mitigation and protection, including implementation of 
ESA, is responsible for power rate increases. Blaming salmon 
recovery for the cost of heating our homes is unfair. These 
statements are biased by overlooking many factors that 
contribute to the cost of electricity.
    We feel divisiveness, making us wonder if the region's 
relying on biased information will cast out any chance that 
salmon will have a place in the culture, economy, and future of 
the Basin.
    In the past we've had to publicly discredit the millions of 
dollars spent to save a single endangered fish. We have fuel to 
use by not relying on such misinformation that perpetuates any 
anxiety. We need to take care of this. There are other major 
causes of BPA rate increases over the past 25 years which have 
already been mentioned. For instance, overcommitments to 
utilities. Not surprisingly, these factors don't get much 
publicity. Based on BPA's own estimate, their 2001 decision to 
overcommit to utilities and direct service industries added 
$3.9 billion in costs over the current five-year rate period.
    In every year BPA paid $828 million in annual costs 
associated with nuclear power. $250 million goes to operate the 
Columbia generating station. $275 million to pay the debt on 
that plant. And $325 million to repay the debt on two nuclear 
plants that were never completed and don't produce a spark of 
electricity.
    Add this to the general hydropower system various subsidies 
and power commissions we rate payers can see what constitutes 
about 90 percent of our bill. We have reviewed H.R. 4857 
Transparency Act of 2006. We support Transparency and agree 
that our fellow consumers have a right to know. However, as 
written in legislation, it has shortcomings. If we truly 
embrace Transparency, this legislation must be--We should be 
informed of all the costs contained in our power bill. If we 
truly embrace honesty, then we need to be out here finishing 
those that are legitimately tied to ESA efforts.
    The BPA fish and wildlife is required by a number of 
Federal statutes and treaties and not just ESA. The Northwest 
Power Act alone requires that we mitigate, protect, and enhance 
the fish and wildlife impacted by the Federal hydrosystem. This 
includes funding of valuable projects for nonresident fish and 
wildlife that provide recreational and commercial opportunities 
in all four states. Some projects have multiple benefits so 
they share ESA benefits. They comment on ESA related costs 
would require more administrative effort, and even these costs 
should be shown on our monthly utility bills.
    Foregone revenues, as used by BPA, would be fiction. No 
entity, public or private, should be able to convert potential 
revenue to a cost if they were allowed to violate Federal laws. 
Can our farmers and loggers claim foregone revenues every time 
they forgot a necessary worker safety or complied with 
pesticide laws?
    I see my red light is on. I have provided actual written 
testimony. But in closing, I ask you to consider salmon 
recovery as an investment and not just a cost. If we were to 
fully implement a plan recommended by a work group of the 
region's fish and wildlife, we'd inject approximately $2 
billion in Eastern Washington and Oregon, Idaho, and Western 
Montana over the next ten years. This funding supports jobs in 
rural communities by implementing on the ground efforts.
    In conclusion, Mr. Hastings and Miss McMorris, the Columbia 
River is capable of multiple purposes and the natural path of 
the water of the river cannot be claimed by a single interest. 
Even the Power Act calls for equitable treatment. Today what we 
need for salmon and what rural communities need and economies 
need in terms of energy costs is the same thing, certainty, the 
salmon resource and with it tribal rights reserved under the 
treaty with the United States will probably secure a place on 
the list of considerations reviewed by the Congress and Federal 
agencies in determining the appropriate action and unnecessary 
costs to be borne by all of us ratepayers and taxpayers.
    We look forward to working with you and your staff to find 
the appropriate regional and national support balance, 
certainty, and, ultimately, success to our region. Thank you 
very much.
    [The prepared statement of Ms. Miles follows:]

       Statement of The Honorable Rebecca Miles on behalf of the 
              Columbia River Inter-Tribal Fish Commission

    I am Rebecca Miles, Chairman of the Nez Perce Tribal Executive 
Committee and a commissioner on the Columbia River Inter-Tribal Fish 
Commission. Thank you for allowing me an opportunity to offer testimony 
on behalf of the Commission.
    The Columbia River Inter-Tribal Fish Commission (CRITFC) was formed 
by resolution of the Nez Perce Tribe, the Confederated Tribes of the 
Umatilla Indian Reservation, the Confederated Tribes of the Warm 
Springs Reservation of Oregon and the Confederated Tribes and Bands of 
the Yakama Nation. The Commission's primary mission is to provide 
coordination and technical assistance to the member tribes to ensure 
that outstanding treaty fishing rights issues are resolved in a way 
that guarantees the continuation and restoration of our tribal 
fisheries into perpetuity.
    The Tribes have had a seat at the Columbia River Basin's table for 
over 10,000 years. Salmon was so fundamental to our society that in 
1855 when our four sovereign tribes and the United States collaborated 
and negotiated treaties 1, our tribal forefathers explicitly 
reserved--and the U.S. agreed to assure--our right to fish in 
perpetuity within our ancestral homelands as well as to ``take fish at 
all usual and accustomed places''. We kept our word by ceding vast 
portions of our homelands to the U.S., and we fully expect the U.S. to 
honor their word. On the Columbia River and its many tributaries, our 
peoples have exercised this right since time immemorial. It was the 
expectation of our treaty negotiators then that the tribes would always 
have access to abundant runs of salmon; it is our expectation now that 
you will honor that commitment and take the steps necessary to protect 
our trust resource. This reserved right has not been diminished by time 
and its full exercise has been upheld and affirmed in several U.S. 
Supreme Court decisions.
---------------------------------------------------------------------------
    \1\ Treaty with the Yakama Tribe, June 9, 1855, 12 Stat. 951; 
Treaty with the Tribes of Middle Oregon, June 25, 1855, 12 Stat. 963; 
Treaty with the Umatilla Tribe, June 9, 1855, 12 Stat. 945; Treaty with 
the Nez Perce Tribe, June 11, 1855, 12 Stat. 957.
---------------------------------------------------------------------------
    It is important for members of this subcommittee as well as the 
region to understand how the four Columbia Basin treaty tribes feel 
about the relationship between our shared goal of maintaining access to 
affordable electricity and the federal obligation to restore salmon to 
healthy sustainable runs under our treaties, as well as under the 
Endangered Species Act (ESA) and the Pacific Northwest Electric Power 
Planning and Conservation Act--Northwest Power Act for short.
    The ancestral homelands of our Commission tribes cover roughly one-
third of the entire Columbia Basin in Washington, Oregon and Idaho. 
Along with the northwest states and federal agencies, we have been 
involved in an intensive collaborative effort to construct a salmon 
recovery plan for the Columbia River basin. It is our goal to deliver a 
plan to the region with hallmarks I feel you would support--certainty 
and accountability. We feel we have an opportunity to deliver a plan 
that can win regional support and be put into practice immediately. In 
our view, the element most crucial to success or failure, and lacking 
from the previous salmon plan, is sufficient funding. I appeal to you 
to work with our tribes and collaboration partners to ensure that all 
the needed ingredients for a successful salmon plan are realized.
    As a region, we remain concerned over power rates and safeguarding 
a healthy environment. Often, salmon and economy are divisive words. 
One of the first steps to overcome this divisiveness is to squelch the 
fear that Endangered Species Act costs are the primary reason for 
electrical rate increases. Claims such as those found in your press 
release about the costs per fish are based on a long-discredited 
analysis and serves to weaken relations and pit salmon recovery against 
the economy.
    The causes of Bonneville Power Administration (BPA) rate increases 
over the past 25 years are primarily from nuclear costs and over-
commitments to utilities and aluminum smelters. For example:
      BPA's 2001 decision to over-commit to utilities and 
aluminum smelters added $3.9 billion in costs based on BPA's own 
estimate.
      BPA's annual payments for nuclear plants average $828 
million a year.
    By comparison, BPA funds the Northwest Power and Conservation 
Council's (NPCC) Fish and Wildlife Program and FCRPS Biological Opinion 
on the average of $143 million dollars annually--roughly 5% of its 
total expenditures.
    The region must consider salmon and ESA costs in another way: an 
economic investment in rural communities. Full implementation of 
subbasin plans as recommended by a workgroup of the Columbia Basin Fish 
and Wildlife Authority (comprised of the basin's state, federal and 
tribal fish and wildlife co-managers) would inject approximately $2 
billion in Eastern Washington, Eastern Oregon, Idaho, and Western 
Montana. If this work is implemented over the next ten years, the 
annual funding would support more than 5,000 jobs (assuming $40,000 per 
job).
    This economic infusion could be realized and BPA rates would still 
be 29% to 38% below market rates. Over the past ten years BPA rates 
have averaged 27 percent below market, so the region could still 
increase investments in salmon recovery and still be further below 
market rates than the last ten years.
    The pie could get bigger, and sweeter, at the same time. This could 
be achieved by the BPA building adequate salmon costs into their next 
rate case. Under the current rate case, costs were assumed to be an 
average of $186 million. For the next rate case, covering the years of 
2007 through 2009, the costs should ramp up to an average of $240 
million per year. The effect of including these costs on the 
hydroelectric power rates is minimal: for the average household that 
gets all of its power from BPA, building these costs in the power rate 
would mean an increase of about one dollar per month. BPA only provides 
about forty percent of the power in the Pacific Northwest, so most 
homes would see smaller monthly increases in power costs.
    We also want to make you aware that irrespective of power rate 
increases or decreases, Eastern Washington is at risk of losing 
existing resources. Last week a different committee of the U.S. House 
of Representatives approved a spending bill that would reduce the 
Pacific Coastal Salmon Recovery fund by $45 million. Much of that loss 
will be felt right here in the mid-Columbia.
    As well, a proposal by the NPCC would transfer $7 million per year 
for salmon restoration and mitigation OUT of Eastern Washington and 
redirect them to Montana and Idaho for resident fish projects (see map 
on page 9).

H.R. 4857 the Endangered Species Compliance and Transparency Act of 
        2006
    We have read the text of H.R. 4857, the Endangered Species 
Compliance and Transparency Act of 2006. We do not dispute a need for 
transparency and reliable consumer information however no one should be 
unfairly singled out in this analysis. To aid the consumer on their 
overall power bill they must have a better understanding of all costs 
that constitutes their bill, including the cost to the consumer of 
implementing this legislation.
    We cannot support this legislation as written for the following 
reasons:
    1.  BPA's fish and wildlife funding is not exclusively for ESA 
compliance. BPA's fish and wildlife obligation is also required by a 
number of federal laws and treaties among which ESA is only one. The 
Northwest Power Act called for a program to mitigate, protect and 
enhance the fish and wildlife resources affected by the federal dams. 
There are many non-ESA costs within BPA's fish and wildlife funding 
making it difficult and costly to determine costs attributed 
exclusively to ESA. All non-ESA costs must be deducted such as 
wildlife, resident fish, and administration for example. On-the-ground 
projects with multiple benefits would also require that any costs 
attributed to ESA be separated.
    2.  H.R. 4857 relies on the BPA's claiming of so-called ``foregone 
revenues''. Calculating costs in this manner implies that BPA can claim 
savings for violating federal laws. No other business or government 
agency calculates the revenues or profits that it could have made if it 
had violated Federal laws, regulations, or court orders as a part of 
foregone revenue and costs. The legislation should not put such a 
requirement into law. If lost revenues are used to analyze a power 
bill, consumers should also be told of lost revenues due to other 
public benefits: irrigation, flood control, transportation and 
recreation.
    3.  The economic analysis required by H.R. 4857 does not address 
any associated benefits. In order to make a more fair assessment of 
costs, any analysis would be strengthened by including economic 
opportunities created by a salmon economy plus investments in on-the-
ground salmon restoration work. We must not underestimate the economic 
importance of salmon.
    4.  This legislation is likely to focus national attention on the 
fact that BPA's rates are currently about 60 percent below market 
rates.
    We would support greater ratepayer understanding of all costs that 
constitute their utility bills, in effect true and full transparency 
which would include, for example, nuclear debt. Every year BPA 
customers pay $828 million in annual costs associated with nuclear 
power. $250 million goes to operate the Columbia Generating Station, 
$275 million to repay the debt on that plant, and $325 million to repay 
the debt on two nuclear plants that were never completed. Add to this 
amount the debt owed on the hydropower system, various subsidies and 
power provisions and a customer will see what constitutes 95% of their 
bill.
    Also, if foregone revenue was a valid concept, consider the 
hydropower revenue losses caused by irrigation. In the NPCC's 4th 
Annual Report to the northwest Governors on the Fish and Wildlife 
Program, they stated irrigation is the largest non-power user of 
Columbia and Snake River water accounting for net water withdrawals of 
about 14.4 million acre-feet of water annually. According to their 
analysis, this volume of water, were it left in the river and used to 
generate hydropower instead of being withdrawn for irrigation, would 
yield about 625 average megawatts of electricity (that is, averaged 
across all 12 months). At BPA's rates, this additional power would be 
worth $170 million per year or $1.7 billion dollars over 10 years. A 
recent analysis by the NPPC calculated that at average market rates, 
the foregone revenue would be closer to $250 million per year. At the 
market prices for the summer of 2005, the lost revenue associated with 
irrigation withdrawals was over $380 million. BPA does not count 
irrigation as a cost or foregone revenue. It is interesting that we 
don't debate irrigation as decreasing revenues or raising electrical 
rates or classifying it as foregone revenue. Instead, we accept 
agriculture as a mainstay to the region's livelihood and so should we 
also accept salmon.
    The Northwest Power Act requires equitable treatment between the 
purposes for which the dams are operated. The natural capital of water 
in the river cannot be claimed by a single interest. The Tribes have 
asked for river operations that provide for the natural needs of the 
fish. Yet, the legitimate use of spill for smolt survival is met with 
disdain and is characterized as lost revenues. In addition, BPA's 
purchase of electricity to meet their legal obligation to provide 
sufficient flows for salmon migration and habitat is also mislabeled as 
a cost in their fish and wildlife budget.
    The early settlers took a cue from the Tribes in recognizing the 
economic wealth contained in the salmon. Salmon, like timber and 
agriculture, provided an economic foothold in this region. We are 
accustomed to understanding the timber and farming communities' 
contribution to the economy and the imprint their rich family heritage 
and culture has given to this region--it is rightly so. And, just as 
passionately and determined, we should also defend the historic salmon 
economy and its legacy that stretches even deeper in history.
    A study done by the Northwest Power Planning Council in the mid-
80's found that the hydropower system is directly responsible for the 
loss of between five and eleven million salmon per year from the 
historic high of sixteen million. These losses are borne by communities 
and cultures in our region and beyond. We must not ignore these costs 
to the system. It is unfair when, at the same time, water that is 
needed to ensure the safe passage of salmon to the ocean is being 
charged as a cost against the ESA.
    The Columbia River was built to support multiple purposes. What we 
need for salmon, and what rural economies need in terms of energy costs 
is the same thing, certainty. The salmon resource, and with it, tribal 
rights reserved under treaties with the United States must have a 
secure place on the list of considerations reviewed by the Congress and 
federal agencies in determining the appropriate costs to be borne by 
ratepayers and taxpayers.
    We look forward to working with you and your staffs to find the 
appropriate sources of regional and national support to bring balance, 
certainty and ultimately success to our region. We need a commitment 
from the Congressional Delegation to support an aggressive effort to 
rebuild salmon runs to sustainable, harvestable levels. The U.S. must 
fulfill the commitments entered into by treaties with our tribes.
    Tribes have the longest history of collaboration in the region 
beginning long before our ancestors negotiated treaties in 1855. Today, 
we are working along side our neighbors in the watersheds to restore 
salmon habitat, we share in the harvest with non-Indian commercial and 
recreational fisherman, and we share in the hope that we can overcome 
the divisiveness and strained relations by working through common 
understanding. And, we will continue to work with you to secure the 
resources necessary to get the job done.
    Thank you for this opportunity to offer this testimony. A more 
detailed technical analysis is attached.

      Technical Recommendations and Concerns of the Columbia River

         Inter-Tribal Fish Commission for the Field Hearing on

         ``Electricity Costs and Salmon: Finding the Balance''

                          Friday, July 7, 2006

I. A STRONG FEDERAL COMMITMENT TO SALMON RECOVERY IS NEEDED
      We need a commitment from the Congressional Delegation 
that they will support an aggressive effort to rebuild salmon runs to 
sustainable, harvestable levels. The Federal government must fulfill 
its commitments in the Treaties signed with our tribes.
      Rebuilding salmon runs will provide thousands of jobs in 
eastern Washington and Oregon and in Idaho.
      Federal agencies should work with the fish and wildlife 
managers to develop a science-based plan that will protect and recover 
listed salmon species and rebuild salmon runs to sustainable, 
harvestable levels.
      The federal agencies should work with the fish and 
wildlife managers to develop a detailed workplan to implement these 
efforts. The plan should include:
        An aggressive schedule,
        A detailed budget,
        An allocation of implementation responsibility, and
        Funding commitments.
      We want to work with the Congressional delegation to 
secure federal appropriations wherever possible.

II. TRIBAL EFFORTS ARE SUCCEEDING IN REBUILDING SALMON, MORE ARE NEEDED
    The tribes' vision and their actions have been simple: ``Put the 
salmon back in the rivers and protect the watersheds where they live.'' 
The following are a sample of tribal successes in carrying out this 
vision.
    In the Clearwater River of Idaho, the Nez Perce Tribe has 
resurrected Coho salmon runs that went extinct in the 1970s. The 
tribe's efforts returned more than 1,100 Coho to the Clearwater River. 
The tribe also has taken the lead in restoring and protecting salmon 
habitat. It implemented its plan against great opposition and produced 
results in less than eight years. Coho are back in the river.
    In the Methow River of Washington, the Yakama Nation, helped save 
thousands of spring chinook from destruction by federal and state 
agencies. The Yakama Nation led an effort to allow hatchery-reared 
spring chinook to spawn in the Methow River rather than be killed due 
to mismanagement over genetics. The tribe and others blocked the 
hatchery entrance, thereby allowing the nearly 2,000 adult salmon to 
spawn in the river. As a result, spring chinook redds (nests) increased 
in less than three years--from 15 redds in 1995, to 36 redds in 1999, 
to 368 redds in 2000, to 4,400 redds in 2001. Additionally, the tribe 
worked with local irrigators to help conserve water critical to spring 
chinook spawning and rearing. Spring chinook are back in the river.
    In the Hood River of Oregon, the Warm Springs Tribe has led efforts 
to restore habitat and supplement wild steelhead and spring chinook 
through appropriate hatchery technology. The tribe is operating the 
low-tech, yet highly successful Hood River salmon acclimation and 
release facilities. The facility is designed to increase survival of 
spring chinook and steelhead juveniles and boost the naturally spawning 
population. Prior to 2001, the average size of the spring chinook run 
was 200 fish. But it jumped to 1,100 fish in 2001 and to 1,600 fish 
this year. The winter steelhead run also has increased dramatically on 
the Hood River. Last year--2000-2001--it reached about 2,250 fish, up 
significantly from the average run size since 1991 of 700 fish, and 
this year it climbed to 2,500 fish, making it the highest winter 
steelhead run on record since the tribe started counting it during the 
1991-'92 season. Steelhead and spring chinook are back in the river.
    In the Umatilla River of Oregon, the Umatilla Tribe has spearheaded 
one of the most successful models of salmon restoration. Since 1984, 
the tribe has worked with irrigators, state agencies, environmental 
groups, and local citizens to rebuild salmon runs from an average of 
1,500 annually to as many as 30,000 fall and spring chinook, Coho, and 
steelhead annually. Working with local communities, water has been 
restored to the river, habitat has been improved, and hatchery 
technology is supplementing wild salmon populations. Today, once-
extinct spring chinook salmon are returning to spawn. As much as 20 
percent of the reintroduced spring chinook are naturally spawning. 
Spring and fall chinook, Coho, and steelhead are back in the river.
    The Tribes have helped achieve significant accomplishments. Ocean 
harvest that intercepts Columbia River chinook has been reduced nearly 
50 percent since the 1999 Pacific Salmon Treaty agreement. The tribes 
played a pivotal role in reaching this agreement. The tribes have led 
the region's efforts to protect fish habitat on federal lands and 
restore habitat in cooperation with local landowners on private and 
tribal lands. They also have been in the forefront of efforts to 
require annual flow and spill over Columbia and Snake River 
hydroelectric dams, the most effective way of passing fish in the 
river. Today the tribes and other citizens of the Pacific Northwest are 
benefiting from the hard work.

A. MORE FISH AND WILDLIFE EFFORTS ARE NEEDED
1. The current funding problem
    The NPCC and BPA are currently making decisions on fish and 
wildlife projects for 2007-2009. The fish and wildlife managers 
developed detailed recommendations for projects that are needed during 
this period. BPA's proposed funding level will require significant cuts 
in ongoing projects that affect listed species. The proposed funding 
levels and cuts are shown in the following table. These cuts will 
impact ongoing projects and significantly limit new projects.

[GRAPHIC] [TIFF OMITTED] T8557.007

    The map on page 9 shows the reallocation proposed for FY 2007-2009 
compared to the average for the Council's recommendation in FY 2004-
2006. All of the areas that will lose funding have listed salmon and/or 
steelhead. Based on this reallocation, the funding available to 
implement projects under the Council Program and the FCRPS remand will 
be cut significantly. The reallocation will transfer $7 million per 
year away from projects in eastern Washington and Oregon.
[GRAPHIC] [TIFF OMITTED] T8557.008


2. BPA can fully fund salmon recovery
    Fish and wildlife managers have developed several estimates of fish 
and wildlife costs. The first was prepared by CBFWA in 1998 as part of 
the Multi-Year Implementation Plan. This effort developed costs for 
implementing all of the elements of the Council Program and FCRPS 
Biological Opinion. The annual costs at the time were $200 to $225 
million--this would be approximately $275 million today, adjusted for 
inflation.
    In 2003, CBFWA and the NPCC conducted the Provincial Review to 
determine the costs of implementing projects that had been approved by 
the fish and wildlife managers, the Council, and the Independent 
Science Review Panel. The Provincial Review identified BPA revenue 
requirements (capital, reimbursable costs, and direct program) of $310 
million per year for FY 2003 through FY 2006 ($329 million adjusted for 
inflation).
    CRITFC, the Oregon NPCC office, and the Yakama Nation also 
developed estimates of the costs of implementing the 2000 FCRPS 
Biological Opinion and NPCC Program in January of 2001. This estimate 
was based on more aggressive habitat restoration activities to 
implement the ``Aggressive Non-Breach Alternative'' in the Biological 
Opinion and had an annual cost of $356 million (approximately $400 
million adjusted for inflation to 2005 dollars). This figure assumed 
that all of the costs would be expensed; if CRITFC had assumed that 
some of the costs would be capitalized, the estimate would be similar 
to the recent CBFWA costs.
    The following figure has been adjusted for inflation and shows that 
BPA has never provided funding at the levels recommended by the fish 
and wildlife managers.
[GRAPHIC] [TIFF OMITTED] T8557.009


3. 2007-2009 Biological Opinion and Program cost estimates
    The CBFWA formed a workgroup comprised of federal, state, and 
tribal fish and wildlife managers to prepare detailed estimates of the 
costs of implementing the subbasin plans and other Program measures.
    The subbasin plans were the produce of a multi-year, $13 million 
effort involving fish and wildlife managers, local stakeholders, and 
other interested parties. This effort developed plans for all of the 
subbasins in the Columbia River Basin. These plans assessed the current 
conditions in each watershed, the desired population levels, and the 
key limiting factors. The plans also included specific strategies and 
management plans to achieve the biological objectives for each 
subbasin. Each plan addressed the requirements of the Council's 
program. (See the Columbia River Basin Fish and Wildlife Program, pages 
39 to 43.) The NPCC formed technical and policy level groups to oversee 
the development of the subbasin plans and the plans were reviewed by 
the Independent Science Advisory Board.
    The CBFWA workgroup coordinated the efforts of the Columbia Basin 
fish and wildlife managers in the development of detailed budgets to 
implement the subbasin plans. The CBFWA workgroup effort was based on 
the detailed analysis of the fish and wildlife managers of the 
production and habitat costs associated with implementing the NPCC Fish 
and Wildlife Program and the FCRPS Biological Opinion. The workgroup 
compiled the cost estimates for 30 subbasins into province level costs; 
where costs were not available for a subbasin, the workgroup 
extrapolated costs from similar subbasins based on land area.
    The workgroup incorporated the production and habitat costs into 
the other costs estimates that had been developed by the NPCC and BPA 
to develop an overall budget for the Integrated Fish and Wildlife 
Program. The CBFWA workgroup circulated its draft report in beginning 
in January of 2005 to the fish and wildlife managers, the Council, 
Bonneville, utilities, and others. The workgroup incorporated all of 
the comments it received and the review process improved the quality of 
the analysis. The workgroup specifically requested comments on whether 
there were any better assumptions or costs for the report. We did not 
receive any analysis from Bonneville or its utility customers that 
provided alternative costs for implementing the subbasin plans and 
other elements in the Program and Biological Opinion.
    The CBFWA workgroup report is the most detailed estimate of the 
costs of implementing the NPCC Fish and Wildlife Program and the FCRPS 
Biological Opinions available. In fact, it is the most detailed 
estimate ever produced on this issue. The Yakama Nation provided this 
report to BPA staff several times, including in our April 29, 2005 
comments on the PFR and attached the CBFWA workgroup report.
    The CBFWA workgroup found that implementing the habitat and 
production activities and other measures in the NPCC's Program had a 
total cost of $1.5 billion and the cost of wildlife mitigation was $300 
million over the next ten years. Based on this work, CBFWA wrote to BPA 
and the NPCC on March 16, 2005 to support adequate funding for fish and 
wildlife in the next rate case. The letter states:
          While CBFWA Members are continuing to review the detailed 
        costs, the analysis completed to date provides a strong basis 
        for increasing the funding for BPA's Integrated Program in the 
        next rate case period to at least $240 million per year. This 
        figure assumes that BPA would use its borrowing authority for 
        new production facilities and the acquisition of land and water 
        to protect habitat. It also does not include a comprehensive 
        assessment of costs for mainstem measures beyond those 
        contemplated in the Updated Proposed Action or the NPCC 
        Program. Additional mainstem measures are necessary to protect, 
        recover, and restore anadromous fish impacted by the federal 
        hydrosystem...
          Based on our work to date, it is clear that the current 
        spending levels are inadequate to protect, mitigate, and 
        enhance fish and wildlife under the Northwest Power Act. Our 
        analysis shows that at the current spending levels, it would 
        take over 100 years to implement all the measures contemplated 
        in the NPCC Program.
    A key issue was the pace of implementation for the habitat and 
production activities. The workgroup developed realistic 
recommendations for implementation that would increase funding for 
implementation over the next four years. This would provide time to 
build the necessary staffing, programs, and other infrastructure for 
implementing the strategies in the NPCC Program.
    The workgroup recommended that FY 2006 funding should be $186 
million--this is the level originally assumed in the 2002 Rate Case; we 
also understand that it is the approximate planning target being used 
by the BPA fish and wildlife division. We further recommended that 
funding should ramp up to $200 million in FY 2007, $225 million in FY 
2008, and $240 million in FY 2009. The figure below shows this ramp up.
[GRAPHIC] [TIFF OMITTED] T8557.010


    This funding level would put the region on a path to implement the 
subbasin plans in about ten years. This pace of implementation would 
have much lower biological risk to listed species and offers some hope 
of progress on restoring the treaty fisheries of the Columbia Basin 
Indian tribes.
    These recommendations would minimize biological risk to species in 
the Columbia River Basin; BPA should implement actions to provide the 
habitat conditions that these species need to survive as soon as 
possible. Many of the ESUs listed under the ESA have growth rates 
(lambdas) that are less than 1.0--that means these populations are not 
replacing themselves and will continue to decline toward extinction. 
This pace of implementation will also have the lowest long-term costs 
because expenses associated with acquiring or leasing land and water to 
protect and enhance habitat will increase significantly faster than 
inflation, especially the acquisition of land in riparian areas to 
protect habitat.
    Therefore, we conclude that a ten-year implementation schedule for 
the subbasin plans has the lowest biological risk and the lowest long-
term costs. We also note that implementation of the subbasin plans 
represents a small portion of the habitat protection and enhancements 
needs in the Basin. The CBFWA workgroup did a course grain analysis of 
the total habitat work needed to protect and enhance all of the habitat 
in the Basin and found that this effort would be significantly larger 
than the work identified in the subbasin plans. Completing the subbasin 
plans as quickly as possible will provide a good start to the long-term 
habitat work that is likely to be needed to meet our goals.
    BPA has not incorporated these estimates in setting its budget for 
the Integrated Program. At the current pace of implementation, it would 
take 40 to 80 years to implement the Council Program and FCRPS 
Biological Opinion. BPA's estimate is not based on the costs of 
implementing the subbasin plans or meeting the goals and objectives of 
the Columbia River Basin Fish and Wildlife Program. The Bonneville 
budget uses unrealistic assumptions about inflation, and the funding 
needed to implement the Program and Biological Opinion.

4. Costs could be higher
    The CBFWA workgroup identified a number of uncertainties that could 
increase Bonneville's total system costs.
    The remand of the current Biological Opinions will result in 
significant changes in required fish and wildlife activities, and will 
likely increase costs or affect revenues. We expect that other river 
operation, habitat, and monitoring and evaluation activities will be 
identified in the remand process.
    NOAA Fisheries is developing recovery plans for salmon and 
steelhead listed under the Endangered Species Act. The recovery plans 
are likely to include more actions than are currently identified in the 
subbasin plans and therefore the costs of implementation are likely to 
be higher. We base this judgment on the fact that the subbasin plans 
were developed by fish and wildlife managers and stakeholders in each 
of the watersheds through a consensus process. In some cases, local 
landowners objected to some of the habitat and water quality actions 
identified by the fishery managers; as a result, measures that will be 
needed to recover listed species were not included in the final 
subbasin plans.
    The CBFWA workgroup cost analysis assumed that other branches of 
the Federal government would provide contributions. For example, the 
costs for implementing plans in several subbasins (notably those in the 
Intermountain Province) assume funding from the federal land management 
agencies that may or may not be forthcoming. If additional Federal 
appropriations are not available, the region will need to address how 
to accomplish this work.
    The prospect of shifting the cost of the Mitchell Act hatcheries to 
BPA is a substantial uncertainty, considering Congress's previous 
interest in this issue and increasing pressures on the federal budget.
    Given this analysis, the Tribes are concerned that the BPA proposal 
for the Integrated Fish and Wildlife Program is not adequate to 
implement the Council Program and the Biological Opinions. Failure to 
make adequate progress could increase the risk of extinction for listed 
species and makes it unlikely that the region will achieve the fish and 
wildlife rebuilding goals in the Council's Program.
    All of these uncertainties point to the likelihood of increasing 
costs for Bonneville to meet its fish and wildlife responsibilities 
during the FY 2007 through FY 2009 rate period. The Initial Proposal 
does not adequately address these uncertainties.

III. H.R. 4857 IS UNNECESSARY
A. Substantial Information Is Already Available About BPA Costs
    BPA's Power Function Review, 7i Rate Proceedings, and other 
publicly available reports document BPA costs and projected revenues. 
H.R. 4857 is not needed for this purpose.
    In 2006, BPA rates are 59 percent below the market rate for 
electricity--based on the assumptions that BPA has used in its current 
rate case. Based on BPA's assumptions for future market rates, it will 
be 41 percent below market through 2009. The causes of BPA's rate 
increase over the past 25 years are primarily from nuclear costs and 
over-commitments to utilities and aluminum smelters. These factors 
don't get much public attention. For instance, BPA's 2001 decision to 
over-commit to utilities added $3.9 billion in costs based on BPA's own 
estimate. BPA's annual payments for nuclear plants average $828 million 
a year. Of this payment, approximately $450 million per year is for 
nuclear power plants that were never completed and never produced 
electricity.
    In addition, BPA subsidizes (in cash payments) Investor Owned 
Utilities of the Pacific Northwest $324 million per year. BPA's subsidy 
to customers of investor-owned utilities is $300 million per year. 
BPA's subsidy to Direct Service Industries over the next three fiscal 
years is projected by BPA to be approximately $59 million per year. 
Finally, the ``cost'' to BPA of water withdrawn for irrigation uses in 
the Columbia Basin is $250 million per year. Each of BPA's customer 
classes has and will strenuously argue that these costs either are or 
are not required by one or more federal laws depending on whether the 
class is benefited or impacted. See e.g. Dept. of Water and Power of 
the City of Los Angeles v. BPA, 759 F.2d 684 (9th Cir. 1985); Aluminum 
Co. of Amer. v. BPA, 903 F.2d 585 (9th Cir. 1989); Assoc. of Public 
Agency Customers v. BPA, 126 F.3d 1158 (9th Cir. 1997); Central Lincoln 
Peoples' Utility District v. Johnson, 735 F.2d 1101 (9th Cir. 1984); 
Washington Utilities and Transportation Commission v. FERC, 26 F.3d 935 
(9th Cir. 1994).

B. Categorizing BPA's Fish and Wildlife Costs is Unnecessary and 
        Impractical
    BPA's investments in rebuilding fish and wildlife populations is 
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 since most fish and wildlife 
projects are undertaken to implement multiple federal authorities. For 
example, the rebuilding goals of the Columbia River Basin Fish and 
Wildlife Program are much higher than ESA recovery goals and will 
likely require all of the ESA related activities plus additional 
efforts to meet the Northwest Power Act related goal.
    Moreover, most projects undertaken with BPA fish and wildlife 
funding support receive funding support from multiple entities 
including other federal agencies' appropriated funds, as well as state, 
local, tribal, and private funding sources. These funds are authorized 
by a myriad of authorities reflecting local and regional interests for 
many projects that provide multiple benefits, such as simultaneously 
increasing irrigation efficiency, reducing water consumption, reducing 
pumping costs, and increasing streamflows for salmon. These types of 
win-win projects enjoy sponsorship of the tribes in the Grande Ronde, 
Umatilla, Yakima, Walla Walla, John Day river basins. The art of 
assembling local support and funding from diverse sources is already 
fraught with delay and bureaucracy. We don't need more red tape 
challenges!

C. BPA's Approach to Estimating its Foregone Revenue and Replacement 
        Power Cost is not consistent with the Northwest Power Act
    BPA states that its combined net costs include over $300 million 
for hydro system operations for fish and wildlife. BPA counts the 
revenue foregone 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.
    Section 16 U.S.C. 839b(h)(6)(E) requires the Northwest Power and 
Conservation Council (NPPC) to include measures in the 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.
    The current NPCC Program includes these measures.
    In addition, the FCRPS Biological Opinion requires specific flow 
and spill operation to ensure that the operation of the FCRPS does not 
jeopardize the continued existence of listed species under the ESA.
    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 roughly 
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.
    No other business or government agency calculates the revenues or 
profits that it could have made if it had violated Federal laws, 
regulations, or court orders as a part of foregone revenue and 
``costs''. The legislation should not put such a requirement into law.

D. BPA's approach is not consistent for other federally authorized 
        purposes
    Given BPA's practice of reporting foregone revenue for fish and 
wildlife protection, it is interesting that BPA does not report the 
foregone revenue associated with meeting other legal constraints on 
power generation such as providing irrigation water, flood control, 
transportation, or recreation. All of these other federally-mandated 
actions 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--aboutfive percent of the 
total output of the BPA system. At BPA's rates, this additional power 
would be worth $170 million per year or $1.7 billion dollars over 10 
years. A recent analysis by the NPPC calculated that at average market 
rates, the foregone revenue would be $250 million per year. At the 
market prices for the summer of 2005, the lost revenue associated with 
irrigation withdrawals was over $380 million. BPA does not count these 
``costs.''
    Columbia Basin Indian tribes have requested on numerous occasions 
that BPA stop its practice of singling out the costs of meeting one of 
the purposes of the dams--fish and wildlife--in reporting foregone 
revenue. It is not appropriate for BPA to report the costs of operating 
the FCRPS to meet Federal laws and regulations. If BPA believes it is 
required to report these costs, then it should calculate the costs of 
each of the other purposes of the dams and report all of them on a 
consistent basis.

E. BPA's calculation of foregone revenue is flawed
    In the BPA handouts for its Power Function Review, BPA calculated 
that the average ``cost'' of river operations for fish and wildlife was 
$357 million per year. This number was calculated using a base case 
where BPA eliminated all operations for fish and wildlife. This 
assumption is legally flawed. We are also concerned that BPA does not 
count the credits that it receives for these operations. Since BPA 
started taking these credits in 1994, it has reduced its U.S. Treasury 
repayments by more than $1 billion, yet BPA does not offset the 
``costs'' with these credits.
    Finally, calculation of these costs is complicated and 
controversial. BPA did not share its methodology in calculating the 
operations ``costs'' cited above. In a Memorandum of Agreement signed 
in 1996, BPA committed to working with the tribes to develop a 
consensus methodology for reporting river operations and calculating 
foregone revenues and power purchases; this work is still incomplete.

F. Foregone Salmon
    The NPCC found that 5 to 11 million of the salmon lost each year 
(compared to the predevelopment period) were attributable to damage 
caused by the hydroelectric system. Based on this estimate, the 
Columbia Basin Indian tribes and others 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 and the cumulative losses in the 
trillions of dollars.

IV. THE CAUSES OF BPA RATE INCREASES
    BPA customers are concerned that BPA's rates have increased over 
the years; much of the utility concern has focused on fish and wildlife 
costs. This section analyzes the history of BPA rates, the major causes 
of rate the increases, and the relative costs of various categories.
A. BPA Rate History
    BPA rates declined, adjusted for inflation, between 1937 and 1975 
as new federal dams were build in the Columbia basin. In October, 1980, 
BPA implemented an 88 percent rate increase, primarily to address the 
costs of three nuclear plants being build by what was then called the 
Washington Public Power Supply System (WPPSS).
[GRAPHIC] [TIFF OMITTED] T8557.011


    The BPA webpage provides yearly rate information beginning in 1996. 
The figure below shows that between 1996 and the rates proposed for 
2009, BPA rates will have increased by 25 percent in nominal dollars--
about 1.8 percent per year.
[GRAPHIC] [TIFF OMITTED] T8557.012


    When BPA's rates are adjusted for inflation, the analysis shows 
that they have actually declined by 9 percent over this period.
[GRAPHIC] [TIFF OMITTED] T8557.013


Causes of BPA's Rate Increases
    Even adjusting for inflation, the rates show a significant increase 
from 2001 to 2003. The primary cause of this increase was the cost of 
serving additional load that BPA committed to in 2001. In addition, BPA 
used optimistic assumptions about how much revenue it would receive 
from selling surplus electricity and underestimated a number of costs 
it would face.
    The figure below shows the major categories that increased BPA's 
rates. In 2001, BPA decided that it would serve the entire load that 
its customers wanted to place on the agency. BPA committed to serve 
3,400 average megawatts more power than it had available. It assumed 
that it could purchase additional power at market rates, which were 
then about $30 per megawatt-hour. The manipulation of the California 
energy market by Enron and other energy providers increased market 
rates. BPA reported that it paid an average of $185 per megawatt-hour 
to serve the additional load. The total cost of the over-commitment was 
$3.9 billion 2.
---------------------------------------------------------------------------
    \2\ What Led to the Current BPA Financial Crisis? A BPA Report to 
the Region, April 2003.
---------------------------------------------------------------------------
    BPA had also overestimated it revenue from surplus sales of 
electricity; a more realistic estimate prepared for BPA's Financial 
Choices process reduced BPA revenues by $710 million. BPA entered into 
a settlement with investor-owned utilities that set the amount of 
subsidy for the residential and small-farm customers of these 
utilities; the settlement added $370 million to BPA's costs. BPA had 
also used optimistic assumptions about its own administration and 
operating costs; in the 2003 Financial Choices process, BPA estimated 
that these costs would be approximately $220 million higher than it 
originally had assumed. BPA also underestimated the costs of operating 
the Columbia Generating Station (the one nuclear plant that is 
operating) by $194 million and the Corps of Engineers and Bureau of 
Reclamation costs for operating the federal dams by $155 million. 
During the Financial Choices process, the integrated fish and wildlife 
program was below budget by $18 million.
[GRAPHIC] [TIFF OMITTED] T8557.014


BPA Future Costs
    This section summarizes the major categories for BPA proposed costs 
for 2007-2007.
[GRAPHIC] [TIFF OMITTED] T8557.015


Nuclear Costs
    Of the $828 million in annual costs for 2007-2009, $250 million 
goes to operate the Columbia Generating Station, $275 million to repay 
the debt on that plant, and $325 million to repay the debt on two 
nuclear plants that were never completed.
[GRAPHIC] [TIFF OMITTED] T8557.016


V. BPA CAN AFFORD ADDITIONAL FISH AND WILDLIFE INVESTMENTS
    BPA can afford salmon recovery and still provide great benefits to 
Northwest ratepayers. Fish and wildlife managers are working with 
federal agencies to develop a new FCRPS Biological Opinion that 
complies with the Endangered Species Act. That effort should produce a 
science-based plan to protect and recover salmon and steelhead and must 
include actions that are reasonably likely to occur.
    In July, BPA will make final decisions on setting its rates for 
2007 through 2009. Its current proposal includes fish and wildlife 
funding levels that would force immediate cuts in ongoing fish and 
wildlife programs and delay full implementation of the subbasin plans. 
The remand process has assumed these ongoing projects are in the 
baseline and will likely result in additional habitat, hatchery, hydro, 
and harvest actions that will increase implementation costs.
    BPA has asserted that it can adjust its rates to accommodate 
decisions that come out of the biological opinion remand. The treaty 
tribes have provided extensive evidence in the BPA rate case that BPA's 
proposal does not allow it to increase its costs and also assure 
repayment of its debt to the Treasury. In the past, when BPA has faced 
missing a Treasury payment it has deferred salmon recovery actions.
A. BPA's Current rates
    Bonneville rates are currently 59 percent below the market rates 
that Bonneville has assumed for FY 2006. BPA's current rates are 48 
percent below the new resource rate that it has proposed.
[GRAPHIC] [TIFF OMITTED] T8557.017


    Averaged over the past ten years, BPA rates have been 27 percent 
below market rates and 49 percent below the costs of new resources.
B. BPA Rates 2007-2009
    In the current rate case, BPA has assumed that market rates will 
decline by approximately 27 percent between 2006 and 2009. BPA's 
assumption about a reduction in market costs makes BPA's proposed rates 
for 2007 through 2009 slightly closer to market rates. Using BPA's 
assumptions, its rates would be 41 percent below market rates on 
average over the next rate period.
[GRAPHIC] [TIFF OMITTED] T8557.018


C. The Impact of Salmon Recovery on BPA Rates
    This section describes the potential impacts of two alternatives 
for salmon recovery on BPA's rates. It is important to note that these 
costs will not necessarily cause a rate increase. For example, in 2005, 
BPA projected that additional spill at several dams to protect salmon 
would increase rates; however, BPA actually decreased its rates by 1.6 
percent that year because of other factors.
    The assumptions for the additional fish and wildlife costs are 
summarized here and detailed later in this paper.
    Low Case: This scenario is based on the costs of implementing the 
subbasin plans developed for the NPCC and the FCRPS Biological Opinion. 
The costs were prepared by a workgroup convened by the CBFWA. This case 
also assumes that the river operations ordered by the District Court as 
part of the FCRPS Biological Opinion Remand for 2006 would continue 
through 2009; this would reduce BPA's revenue from the sale of 
electricity. The scenario assumes total added costs would be $93 
million in 2007, $114 million in 2008, and $127 million in 2009.
    High Case: The high case assumes the integrated fish and wildlife 
costs above plus $70 million per year to cover the added costs if BPA 
does not use its borrowing authority for land and water acquisitions to 
improve habitat. The high case also assumes the river operations 
recommended by the plaintiffs in the FCRPS Biological Opinion 
litigation. The high scenario assumes total added costs would be $376 
million in 2007, $363 million in 2008, and $362 million in 2009.
D. BPA would be significantly below market rates
    If these additional fish and wildlife costs are added to BPA's 
rates, BPA would be 37 percent below market rates on average over the 
next rate period in the low case and 29 percent below market rates in 
the high case.
[GRAPHIC] [TIFF OMITTED] T8557.019


    The figure below compares the percent that BPA would be below 
market prices, on average, under its proposed fish and wildlife funding 
level and the low and high fish and wildlife funding scenarios 
described above.
[GRAPHIC] [TIFF OMITTED] T8557.020


    Given that BPA's rates are significantly below market rates and 
lower than most other parts of the country, it appears that BPA can 
incorporate the costs to fully implement the NPCC Program and the 
Biological Opinion and still benefit the Northwest economy.
E. Rate Impacts would be small
    The potential rate impacts for residential customers would range 
from zero to $1.90 per month in the low case and zero to $6.22 per 
month in the high case.
    Under a settlement agreement, customers served by investor-owned 
utilities would not pay any of the potential increase. As a result, all 
of the additional fish and wildlife cost must be allocated to a smaller 
group of customers and the impacts are more significant than the 
allocation in the 2002 rate case.
    Based on our analysis, we found that the high case described above 
would result in a potential rate impact of $0.00622 per kilowatt hour. 
3 For an average customer of a utility that purchases all of 
its electricity from BPA, this could result in an increase of $6.22 per 
month--an increase of approximately 9 percent.
---------------------------------------------------------------------------
    \3\ BPA uses a rule of thumb that each $59 million dollars equals 
about $0.001 per megawatt-hour.
---------------------------------------------------------------------------
    BPA serves approximately 40 percent of the region's power, so the 
impact on most ratepayers would be less. We analyzed three other cases: 
a utility that purchase 70 percent of its power from BPA, a utility 
that purchase 30 percent of its power from BPA )for example, Seattle 
City Light, Tacoma City Light) and investor-owned utilities. In the 
high case, the average customer of a utility that purchases 70 percent 
of its power from BPA could pay an additional $4.35 per month--a 6.5 
percent increase. A customer served by a utility that purchases 30 
percent of its power from BPA could pay $1.87 per month--a 2.8 percent 
increase.
    In the low case, we assumed that BPA used its borrowing authority 
to finance some of the land and water acquisitions in the habitat 
measures under the Integrated Fish and Wildlife Program and that the 
Court-ordered river operation for FY 2006 would also be implemented 
during the rate period. In the low case, the average consumer that is 
served by a utility that purchases all of its power from BPA could pay 
an additional $1.90 per month--a 2.9 percent increase. If the utility 
purchased 70 percent from Bonneville, the monthly impact could be 
$1.33--a 2 percent increase. Consumers served by a utility that 
purchases 30 percent of its power from BPA could pay an additional 
$0.57 per month--a 0.9 percent increase.
[GRAPHIC] [TIFF OMITTED] T8557.021

                                 ______
                                 
    Miss McMorris. Thank you. Mr. Voigt.

STATEMENT OF CHRIS VOIGT, EXECUTIVE DIRECTOR, WASHINGTON STATE 
POTATO COMMISSION AND MEMBER, FAMILY FARM ALLIANCE, MOSES LAKE, 
                           WASHINGTON

    Mr. Voigt. Thank you, Congresswoman McMorris and 
Congressman Hastings, thank you for the opportunity. I 
appreciate it. I've got about 20 minutes of testimony I'm going 
to cram into 5 minutes, so please look over the written 
testimony I've provided.
    I have to start with a personal story. I'm going to flash 
back to my 8th grade year sitting in my counselor's office. I 
was meeting with Mrs. Stuart. And we had a thing called a 
computer. And the idea was you filled out this punch card and 
fed it into the computer and the punch card would survey your 
likes and dislikes and so forth and it would spit out what 
career opportunities might be of interest to you in the future.
    First on the list was professional athlete for me. And 
because of bad genetics and I rode the bench in 8th grade 
basketball, I didn't think that was very realistic. Second on 
the list was fish and wildlife biologist, and I thought that 
was appropriate that that was on my list because I remember the 
previous year before in the fall sitting in a coastal stream in 
the Northwest and I saw my first salmon in the wild and it was 
a beautiful experience. And actually at some point I stopped 
fishing just to watch the salmon go from the deep pool that I 
was fishing into the shallow ripples. I thought it was an 
incredible experience and I wanted to share it.
    Third on my career list was an agriculturist, and that's 
the reason today I'm wearing a coat and tie, and I don't 
usually have an opportunity to do that. I stumbled across 
something from my past, my FFA jacket. When I wore this--This 
is from 1982/83 and I don't dare and try to put it on because I 
know I won't fit in it anymore. But when I wore that jacket in 
my senior year in high school in 1982, there was a sense of 
pride.
    I was excited about being involved in agricultural. What 
was before me? I saw so many opportunities, and I was very 
excited about the opportunities of agricultural in the U.S. And 
namely to serve not only food to our domestic needs but also 
feed those around the world.
    Last night I was in my closet and I looked at that jacket, 
I don't know, maybe I was naive back then, because now I look 
at those initials, FFA, and maybe today there should be a 
question mark behind it. Is there a future for agricultural in 
America? Are we heading down a food policy that we're going to 
be outsourcing all of our food now in this country? How 
dangerous is that?
    I want to talk specifically about the potato industry and 
how the management of the Columbia River has affected that. 
Typically now people aren't eating more French Fries, 
unfortunately. But we do experience population growth, and 
every four to five years there's a need for a new potato 
processing plant somewhere in the U.S.
    In the last four or five years, if you look back, we have 
not received a facility here in Washington State, nor have we 
received any of those facilities here in the Northwest. 
Actually, quite contrarily, we've actually lost a few 
processing facilities that have been taken offline and shut 
down and those jobs have been lost.
    Plants are opening up in other locations in the world. The 
two newest places are in Canada. They shut down plants here in 
the U.S. And moved them into Canada. And the reason for that is 
because our processors are essentially blacklisted in the 
Pacific Northwest for any new development of potato processing 
plants here because of unreliable water supplies. We are one 
court case away, one litigation away from shutting down 
everything. And a processor is not going to invest any 
additional infrastructure dollars into new equipment, 
expansion, or new plants if there's an unreliable source of 
water. So it greatly affects us in the potato industry.
    Food processing and potatoes are a big deal to Washington 
State. We grow potatoes on about 165,000 acres in both of your 
districts. We employ thousands of people here in the Northwest, 
about 75,000 people are employed in food processing jobs. The 
average pay is $32,000 a year plus benefits.
    The economic impact of the potato industry here in the 
Columbia Basin is about $3 billion. It's very important. And 
these $3 billion are being invested in small communities, much 
smaller than even here in the Tri-Cities. We're talking Warden, 
Othello, Connell. These are the only economic opportunities for 
these rural communities. It's important that we provide that.
    I don't want my testimony to focus on jobs for--because, 
remember, my career choice was never--also on that list was a 
fish and wildlife biologist. And I think that a compromise, a 
common ground that can solve all of our problems, meet our 
economic needs as well as meet the needs of preserving a 
species and additional water storage.
    I think The Honorable Sid Morrison was correct. We need to 
look at creating more storage so that we can utilize the river, 
not only for biological fish, but also for economic activities. 
We're also looking at a declining aquifer, the Odessa Subarea. 
Surface water is going to be an important aspect. If that area 
goes dry, that's a $600 million loss to the Columbia Basin.
    So on behalf of the Potato Commission and on behalf of the 
Family Farm Alliance we are greatly in support of H.R. 4857. We 
feel it creates a tremendous dialog, including opportunities 
for us to collaborate with more people, to educate the public, 
to get them engaged in the process of finding a true balance.
    We actually hope that we can take this one step farther and 
apply it another agency, and that's the Bureau of Reclamation. 
Because the Bureau of Reclamation also lists ESA costs to their 
customers.
    But thank you for this time, and I would entertain any 
questions.
    [The prepared statement of Mr. Voigt follows:]

 Statement of Chris Voigt, Executive Director, Washington State Potato 
           Commission, on behalf of the Family Farm Alliance

    Mr. Chairman, Members of the Committee, on behalf of the Family 
Farm Alliance and its member organization, the Washington State Potato 
Commission (WSPC). I thank you for the opportunity to testify before 
the Subcommittee today. I serve on the Advisory Committee of the Family 
Farm Alliance (Alliance), and today I am here to convey the message of 
agricultural water users from throughout the West. The Alliance 
advocates for family farmers, ranchers, irrigation districts, and 
allied industries in seventeen Western states. The Alliance is focused 
on one mission--To ensure the availability of reliable, affordable 
irrigation water supplies to Western farmers and ranchers
    We appreciate the effort made by you, Representative McMorris, and 
the other members of the subcommittee to hear our concerns today. We 
particularly appreciate the effort that you and the committee staff 
have made to hear our concerns, here in the Western States. This is an 
important and timely hearing on a matter that has a deep concern for 
family farmers and other agricultural interests in the Pacific 
Northwest--the requirements and costs under the Endangered Species Act 
for salmon recovery.
    This subcommittee has paid close attention to the Columbia and 
Snake River systems, and, in particular, the effect of proposals and 
requirements for salmon recovery on irrigated agriculture, navigation 
and energy production. We are directly impacted by the salmon recovery 
requirements for the Columbia. We appreciate the balanced view taken by 
the Committee of the need to consider not only salmon recovery but also 
the multiple uses and multiple needs of a working river system.
Our Interests in the Columbia River
    The Washington State Potato Commission is a quasi-state agency 
dedicated to protecting the interest of potato growers in Washington 
State. The WSPC membership includes approximately 350 potato growers 
throughout Washington. Potato growers in Washington operate on an 
estimated 165,000 acres of farm land, primarily located in three 
growing regions: the Skagit Valley, Yakima Valley and the Columbia 
Basin. Washington State ranks second in the nation in potato 
production, and potatoes alternate with wheat as Washington's second 
largest agricultural crop. Thousands of jobs in Washington rely on 
potato planting, harvesting, packing, processing and transportation. In 
fact, economists estimate the annual economic impact of Washington 
potato production, packing and processing at approximately $3 billion, 
making potatoes one of the most important value-added agriculture 
commodities in the State. Eight percent, or roughly one out of ten jobs 
in the region, stems from potato production. As water users in the 
Columbia River Basin, WSPC and its members have a direct, substantial 
and daily interest in BPA's programs and operation of the Columbia 
irrigation and hydro electric power systems. With BPA power rates just 
now coming off historic highs, we have little room for rate increases 
or inefficient use of salmon recovery funds. Our members compete 
globally. A rate difference of 1-2% is important to us, and very often 
means whether a business stays in business, goes off-shore, or goes out 
of business. The region has, in many ways, lost its electricity price 
advantage. We cannot afford rate increases and in fact need a rate 
decrease now that the unprecedented rate effects of the West Coast 
price spike of 2001 are receding. Because of the nature of our 
business, and agriculture in general, we are very concerned about BPA 
costs and the efficient use of salmon recovery measures and funds.
Value Added Processing Threatened
    Food processing is vital to the economic growth and stability of 
the Northwest. A recent study by Advanced Research Technologies found 
that food processing annually contributes $20.7 billion to the 
Northwest economy. When the multiplier effects are added, processors 
add $42.5 billion in economic value to the region's economy. Processors 
directly create 75,000 jobs with an average wage of $32,000 per year 
plus benefits.
    The long, grinding and frustrating saga of implementing the 
Endangered Species Act on the Upper Snake and Columbia Rivers is 
beginning to seriously impact the desire of key food processors to 
maintain operations in this region. Washington, Idaho and Oregon are 
three of the most productive and desirable growing regions in the 
world. However, in recent years, processors have been relocating plants 
and moving operations to other regions to mitigate the potential risk 
of being unable to continue to source adequate raw product supplies in 
the region due to curtailment in water supplies. This trend is being 
exacerbated by the rising cost of power, which was once a huge economic 
incentive to Northwest processors but is no longer a competitive 
advantage.
    Potato processors are building and buying plants in Canada, China, 
Europe and Australia. This movement is fueled by a number of issues, 
including market location, currency exchange and government incentives. 
However, in the past five years, we are now seeing the fear of 
inadequate water supplies and the rapidly escalating cost of power, 
both of which are being driven artificially by the ESA, beginning to 
erode the Northwest's competitive advantages in the world marketplace.
    The danger of losing the food processing industry to the world 
marketplace is real. It will not happen quickly and the industry does 
not want to move out of the region. However, the subtle, grinding 
effect of the uncertainty of the ESA will take its toll over the long 
run. As processors make decisions about where to spend capital dollars 
to upgrade plants and equipment or to add new lines and processes, they 
are currently investing outside the region. This trend, if not 
reversed, will slowly but surely move the industry to the locations 
where the most current, productive and efficient plants are located. 
That has always been the Northwest, but now, the trend is changing and 
the newest and most productive plants are no longer in our region.
    We support the House Resources Committee's efforts to bring 
rationality to this process. The bill sponsored by Rep. McMorris is an 
incremental step in the right direction. It is good public policy and 
sends a message to all parties that there will be transparency and 
accountability in the process.
Transparency of ESA Costs and Requirements
    The Family Farm Alliance and the Washington State Potato Commission 
strongly support H.R. 4857, the Endangered Species Compliance and 
Transparency Act of 2006. This much-needed legislation would provide a 
basic level of public disclosure of the costs incurred under the 
Endangered Species Act by the Bonneville Power Administration to 
administer and fund most salmon recovery programs along the Columbia 
River and the basin which it drains. We view the requirements contained 
in this bill as an appropriate public ``right to know'' provision that 
harms no one, yet provides information to the public on the measures 
used under the Endangered Species Act to enhance and advance the 
recovery of listed species.
    In our view, it is common sense to disclose the amount of costs 
incurred under the ESA for salmon recovery. We believe that H.R. 4857 
would provide valuable information to the public regarding the costs 
incurred by the Bonneville Power Administration in compliance with the 
Endangered Species Act. Rates paid to Bonneville Power Administration 
by our members and other customers of Bonneville are investments of the 
public in the federal hydro system. Over the past decade, the public 
has invested, through payment of BPA rates, an estimated $8 billion 
dollars in salmon recovery efforts, including the costs of lost power 
generation. It is important for the public to understand the nature of 
those expenditures and the results of the use of those expenditures. It 
does not make sense to us to shield disclosure of ESA related costs 
from the public which pays those costs through BPA rates.
    Endangered Species Act compliance costs are not ordinary 
operational costs associated with the operation of the federal 
facilities. They arise because of a later listing of species under the 
Endangered Species Act, and the requirement that additional measures be 
taken to provide for conservation and recovery of listed species. These 
are not routine costs. The activities funded by these costs result from 
a separate statute and a separate federal obligation to conserve 
species listed under the ESA. Further, the costs are extraordinarily 
high by any measure. For BPA, it is reported that the costs of salmon 
recovery, at over $600 million per year, exceeds all other costs of 
operating the agency. No other species recovery effort in the country 
matches the costs associated with the recovery of the salmon in the 
Pacific Northwest.
    We support salmon recovery. Our concern is not with the effort to 
restore salmon runs, it is with the efficient and effective use of 
salmon recovery funds. For this reason, we believe a disclosure to the 
public of the costs associated with ESA compliance and recovery 
measures that apply to Bonneville is both fair and appropriate. The 
disclosure requirements of this legislation would assist the public in 
knowing the amount of repair expenditures going to salmon recovery 
efforts, and, we hope, would assist in understanding how efficient are 
those measures.
    H.R. 4857 applies to power marketing administrations, which 
provides a forum to better educate power customers on direct and 
indirect costs resulting from compliance with the Endangered Species 
Act of 1973. Many of the members of the Family Farm Alliance are also 
customers of another agency--the federal Bureau of Reclamation 
(Reclamation)--which is the largest water wholesaler in the country. 
Reclamation provides municipal and industrial water to more that 31 
million people and irrigation water for 10 million acres that produce 
60 percent of the nation's vegetables and 25 percent of its fruit and 
nuts.
    The environmental revolution of the last 30 years imposed new 
requirements for environmental assessment, protection, and enhancement 
on virtually everything the Bureau of Reclamation does. These new 
requirements increase project costs and further constrain the 
availability of water for human uses. Over the years, ESA requirements 
have significantly altered the operations of federal dams and 
reservoirs, which have serious ramifications for agricultural water 
users dependent upon those facilities.
    As is the case in the power arena, under law, those costs are 
passed on by the federal government to water consumers who receive 
federal water. For example, water contractors served by California's 
Central Valley Project (CVP) pay ESA costs accrued to both water and 
power; the power portion of the CVP water contractors costs are 
assessed as Project Use Energy (PUE) used to deliver CVP Water. In a 
given year, between 20% and 30% of the total power generated by the CVP 
are used for PUE.
    There are many examples of direct and indirect costs to water users 
associated with ESA implementation. Direct costs are defined as 
``federal agency obligations related to study-related costs, capital, 
operation, maintenance and replacement costs and staffing costs.'' 
Indirect power costs are defined as ``foregone generation and 
replacement power costs, including the net costs of any transmission.''
    Water users in California pay some direct environmental costs 
through rates that are identified in financial statements as ``water 
marketing'' and ``storage operations and maintenance''. It is also 
possible that some direct environmental costs are hidden in financial 
statements under terms like ``other direct expenses''. The core problem 
is that environmental costs are not separately identified as specific 
line-items. As a result, water users have no idea of the specific 
dollars that they spend on endangered species and other environmental 
causes.
    It is clear that ESA-related costs are not the only ``environmental 
costs''. There are concerns among some water users that additional 
costs beyond the ESA may also be included in rates, such as those 
associated with the National Environmental Policy Act (NEPA) and, in 
California, the Central Valley Project Improvement Act (CVPIA).
    Indirect costs associated with ESA and other environmental 
regulations--such as lost opportunity costs--are sometimes difficult to 
quantify. There may be environmental programs within Reclamation's 
Denver Office that are included in the indirect cost allocations that 
are added to water rates. Other indirect costs may represent a greater 
impact to water users and their communities. As Rep. McMorris has 
noted, in the Sacramento, Colorado, Platte and Missouri river basins, 
the federal government had to modify its hydropower generation services 
and flow requirements to account for ESA mandates. This resulted in 
lost federal hydropower generation and has led to an average of $96 
million per year in ESA costs that is passed on to consumers. It also 
leads to increased uncertainty for family farmers and ranchers, whose 
need for a certain water supply can form the foundation for other 
financial decisions.
    While the Family Farm Alliance and Washington State potato industry 
enthusiastically endorsed H.R. 4857, our discussion regarding this bill 
suggested that, perhaps, it was not enough. Water users from several 
western states have asked that Congress consider expanding the last 
part of the bill to require the Secretary of Interior to conduct a 
project-by-project breakdown of ESA, NEPA and other environmental costs 
for Bureau of Reclamation projects, as well as the power marketing 
administrations. This very simple addition would produce very useful 
information for Reclamation's customers, many of whom are members of 
the Family Farm Alliance.
    We offer some initial thoughts on potential solutions to improve 
the transparency of environmental costs that water users bear:
    1.  Investigate the possibility of using a more detailed 
description of existing rate components to specifically identify 
environmental costs. For some water customers, separately breaking out 
and categorizing existing rate components would certainly be useful and 
increase the transparency of the environmental costs that are currently 
buried in several components of the water user rates. A good first step 
might be to identify the specific types of environmental costs 
(including ESA, NEPA, etc) that might be buried in water rates. Note 
that in many states, State environmental regulations can add still more 
environmental costs. CEQA, which is the State of California's 
equivalent to the Federal NEPA legislation, is a good example of these 
potentially redundant expenditures. Existing Reclamation rate book 
schedules could be adjusted to provide specific line-item detail 
regarding the specific costs that are incurred due to ESA or other 
environmental compliance issues. This would let contractors know what 
their environmental compliance bill is without creating a new 
environmental rate component. This proposal may not necessarily be 
applicable West-wide, and should be considered only after the concept 
is reviewed by federal water customers and Reclamation officials at the 
regional level.
    2.  Review Reclamation's Denver Office to investigate ways to make 
indirect costs more transparent. Beyond the environmental cost 
component indirect costs, it would be helpful to improve visibility on 
indirect costs in general. To get an accurate picture of the total 
environmental expenditures, it is absolutely necessary to include 
Reclamation's indirect expenses at both the Regional Office and Denver 
Office level.
    3.  Establish a ``non-geographic'' division that would be for the 
specific purpose of reporting all environmental costs. The current 
method for reporting costs in some areas of Reclamation is to segregate 
different geographical regions/facilities into divisions on financial 
statements. In the interest of full disclosure to the ratepayers, the 
environmental costs should be grouped into a single section of the 
financial statements, and the cost of each environmental activity 
should be segregated into a specific line-item.
    The Family Farm Alliance believes that, for both electricity and 
water customers to make an informed decision about ESA costs, the first 
step is to provide transparency in consumer costs. The Endangered 
Species Compliance and Transparency Act of 2006 is a bill that will 
take an important first step in this direction. It can be strengthened 
and improved even more effectively by expanding the bill to apply to 
Bureau of Reclamation water projects.
The Region Should Consider Other Measures To Achieve Balance
    The Potato Commission, as well as other constituents of the Family 
Farm Alliance, strongly support balanced natural resource policy, 
efficient use of federal resources and rate payer funds, and the most 
cost-effective environmental policies that may be available. We are 
interested in working more directly with both the Bonneville Power 
Administration and the Bureau of Reclamation on water conservation as 
it would assist in salmon recovery and in the Columbia River Basin 
generally. An issue that may soon develop is the recharging of the 
Odessa aquifer in Central Washington. We are working on developing a 
plan for revamping water management in the Odessa Aquifer area. Part of 
this potential solution may well evolve a buy back by the Bonneville 
Power Administration of water and power usage and a significant 
reduction in aquifer demand. Our hope is that both irrigation and power 
use could be significantly reduced through a cooperative program with 
Bonneville Power Administration and the Bureau of Reclamation to assist 
in the recharging of the Odessa Aquifer.
    We are in the early stages of considering these proposals, and are 
not yet in the position to seek support either at Bonneville or in this 
committee. However, as the committee considers the multiple uses of the 
Columbia River system and the ESA obligations, and other obligations as 
they apply to the federal Columbia River power system, we would ask 
that consideration of an Odessa Aquifer recharging program be put into 
consideration at the appropriate time.
    Mr. Chairman, we are well aware that Congress has a tough job to 
find a balance between conservation, power production, efficient salmon 
recovery and the public interest in salmon recovery and cost 
disclosure. We stand ready to assist the Committee, and the House, in 
seeking to find that balance.
    Thank you for the opportunity to testify. I welcome any questions 
the Committee may have.
                                 ______
                                 
    Miss McMorris. Thank you. Mr. Chandler.

  STATEMENT OF GARY CHANDLER, VICE PRESIDENT OF GOVERNMENTAL 
     AFFAIRS, ASSOCIATION OF WASHINGTON BUSINESS, OLYMPIA, 
                           WASHINGTON

    Mr. Chandler. Thank you, Congresswoman McMorris and 
Congressman Hastings, for bringing the Subcommittee to Eastern 
Washington. It's a lot more easier to get to than going back to 
the other side of the country. I want to thank you also for 
giving me the opportunity to talk this morning on the impact of 
rising electricity rates that impact our economy.
    AWB is the oldest and the largest business organization in 
the State. Our 6,000 members provide over 600,000 jobs to 
people who live in the State of Washington.
    I'd like to first take a personal note, if I may. When 
people talk about the subject, we usually talk in statistics. 
I'm as guilty as anyone. Because the impact is so significant 
and the potential impact is devastating, statistics seem the 
best way to make the case. But remember that there is a real 
person behind every one of those statistics. Each data point is 
a human being with a family and a home and a right to work for 
a decent future.
    But now the future seems in doubt because of the money 
we're spending on the fish. Now let me be clear, we all have a 
responsibility to protect the environment, but there must be, 
as you said at the beginning of this, Congresswoman McMorris, 
about this.
    This morning I'd like to talk about the money that's being 
spent on salmon programs, why do I see power costs as so 
important, and take a look at some of the consequences.
    First, the money. The Bonneville Power Administration has 
spent $5 billion on fish programs over the last nine years. 
That's an impressive number. But to the figures in perspective, 
let's look at it as how much is $5 billion?
    For $5 billion Habitat for Humanity could build 100,000 
homes for poor people. $5 billion is enough to provide health 
insurance for 100,000 low-income families in Washington State 
for the last nine years. $5 billion is enough to provide 11,000 
Washington residents with a $50,000 a year job over the last 
nine years.
    BPA has spent much of that money on fish programs over the 
last nine years. Those costs get factored into what BPA charges 
for electricity. Higher costs mean higher prices.
    I'd like to talk about why higher energy costs are so 
important. Generally speaking, some would say Washington State 
is not the greatest place to do business. We have the highest 
unemployment insurance cost in the nation. We have the fourth 
highest workers comp benefits in the country. Our regulatory 
costs are high and our employers pay the lion's share of the 
taxes in the state.
    But historically our low power rates have made up for that. 
We used to have a real advantage over other states because of 
our low cost of hydropower. But that advantage is slipping 
away. Now for the employers who must deal with all the other 
possibilities, rising energy costs can be the straw that breaks 
the camel's back.
    Salmon programs strike a part of our State's economy 
because they target hydropower. For example, in 1999 our 
electricity rates for residential and industrial property were 
the lowest in the nation. Our commercial rates were the same. 
In 2003 that advantage had disappeared. Our industrial rates 
are higher than 18 other states, and our commercial rates were 
higher than 12 other states.
    We have seen our power costs jump by 50 percent over the 
last 8 years. We're already seeing the impact on rising 
electricity costs in Washington State. Farmers are taking land 
out of production because they can't afford to irrigate. Some 
are getting out of the business all together, and others are 
selling the family farms. Oh, gracious.
    Our thriving aluminum industry is now on the end stage of--
In 1998 we had seven aluminum plants operating in the State of 
Washington. Now there are only two. We've lost 6,000 aluminum 
jobs since 1998, jobs that paid an average of $80,000 a year in 
wages and benefits.
    Will our wood products and our paper industries be the next 
ones to die? Amazingly, things could be worse. U.S. District 
Court Judge James Ridden seems intent on removing four Snake 
River dams to protect the salmon. He keeps rejecting the 
Federal Government's management plans because they don't talk 
about breaching the dam.
    In fact, Redden once complained that the agencies ``have 
failed to demonstrate a willingness to put the needs of salmon 
first.'' If Judge Redden gets his wish, our economy will be 
devastated. According to the Corps of Engineers, breaching the 
dam will cost the State economy $300 million a year for the 
next 100 years. Electricity bill for Northwest ratepayers could 
jump $300 million. Transportation costs would rise $40 million. 
We'd lose 37,000 acres of prime irrigated farmland. 2300 people 
would lose their jobs. And personal income would be cut by $278 
million a year.
    All of us have a responsibility to protect the environment. 
Washington employers have and we'll continue to do our part. 
Our strategy must be guided by common sense and take into 
account the impacts on people as well as animals. The key, 
again, is balance. Thank you.
    [The prepared statement of Mr. Chandler follows:]

  Statement of Gary Chandler, Vice President of Governmental Affairs, 
        Association of Washington Business, Olympia, Washington

    Good morning, my name is Gary Chandler. I'm Vice President of 
Governmental Affairs for the Association of Washington Business.
    AWB is the oldest and largest business organization in the state. 
Our 6,000 members provide jobs for 600,000 people in Washington State.
    Thank you for this opportunity to speak about the impact that 
rising electricity rates have on our economy.
    First, I'd like to make a personal note, if I might. When people 
talk about this subject, we usually talk in statistics. I'm as guilty 
of this as anyone. Because the impact is so significant and the 
potential impact is devastating, statistics seem to be the best way to 
make the case:
    But we need to remember that there are real people behind each of 
those statistics. Each ``data point'' is a human being with a family 
and a home and the right to work for a decent future.
    But now, that future seems in doubt because of all the money we're 
spending on fish.
    Now, let me be very clear. We all have a responsibility to protect 
the environment--but there must be a balance.
    This morning, Id like to talk about the money that's being spent on 
salmon programs; why rising power costs are so important; and take a 
look at some of the consequences.
    First, the money.
    The Bonneville Power Administration has spent $5 billion on fish 
programs over the last nine years. That's an impressive number. But to 
put that figure in perspective, let's look at it another way.
    How much is $5 billion?
      For $5 billion, Habitat for Humanity could build 100,000 
homes for poor people.
      $5 billion is enough to have provided health insurance 
for 100,000 low-income families in Washington State for the last nine 
years.
      Or, $5 billion is enough to have provided 11,000 
Washington residents with a $50,000 a year job over the last nine 
years.
    BPA has spent that much money on fish programs over the last nine 
years. Those costs get factored into what BPA charges for electricity. 
Higher costs mean higher prices.
    I'd like to talk about why higher energy costs are so important.
    Generally speaking, Washington State is not the greatest place to 
do business.
      We have the highest unemployment insurance costs in the 
nation.
      We have the 4th highest workers comp benefits in the 
country.
      Our regulatory costs are high, and employers pay the 
lion's share of the taxes in the state.
    But historically, our low power rates have made up for that. We 
used to have a real advantage over other states because of our low cost 
hydropower. But that advantage is slipping away.
    Now, for employers who must deal with all the other costs of doing 
business in Washington, rising energy costs can be the straw that 
breaks the camel's back.
    Salmon programs strike at the very heart of our state's economy 
because they target hydropower--the main reason for our competitive 
advantage.
    For example:
      In 1999, our electricity rates for residential and 
industrial customers were the lowest in the nation. Our commercial 
rates were second lowest.
      By 2003, that advantage had disappeared. Our industrial 
rates were higher than 18 other states had our commercial rates were 
higher than 12 other states.
    Here in Eastern Washington, irrigators have seen their power costs 
jump by 50 percent over the last few years. That's a bigger increase 
than the last 20 years combined.
    We're already seeing the impact of rising electricity costs in 
Washington State.
      Farmers are taking land out of production because they 
can't afford to irrigate it. Some are getting out of the business 
altogether or selling their family farms to corporations.
      Our once-thriving aluminum industry is now on the 
endangered species list. In 1998 we had seven aluminum plants operating 
in Washington--now there are only two. We've lost 6,000 aluminum jobs 
since 1998--jobs that paid an average of $80,000 a year in wages and 
benefits.
      Will our wood products and paper industries be the next 
to die?
    Amazingly, things could get even worse.
    U.S. District Court Judge James Redden seems intent on removing 
four Snake River dams to protect the salmon. He keeps rejecting the 
federal government's management plans because they don't talk about 
breaching the dams.
    In fact, Redden once complained that the agencies--quote--have 
failed to demonstrate a willingness to put the needs of salmon first--
unquote.
    If Judge Redden gets his wish, our economy will be devastated.
    According to the Corps of Engineers, breaching the dams would cost 
the state economy $300 million a year for the next one hundred years.
      Electricity bills for Northwest ratepayers would jump by 
$300 million;
      Transportation costs would rise by $40 million;
      We'd lose 37,000 acres of prime irrigated farmland;
      2,300 people would lose their jobs;
      And personal income would be cut by $278 million a year.
    All of us have a responsibility to help protect the environment. 
Washington's employers stand ready to do their part.
    But our strategy must be guided by common sense and take into 
account the impacts on people, as well as salmon.
    The key is balance.
    Thank you.
                                 ______
                                 
    Miss McMorris. Thank you. And once again, thank you, 
everyone, for being here today and taking the time to be here. 
Each of you has offered excellent testimony, and it all helps 
in our efforts to address this issue.
    At this time I think we're just going to go back and forth 
for a while. I was going to start with a question to the Corps 
of Engineers and BPA. If you would just talk about how you 
measure the effectiveness of the Corps mandated spills versus 
barging the fish for predator control. Which has been more 
effective over the past two summers of mandated spills?
    Ms. Durham-Aguilera. I'll go first. Thank you.
    [Discussion held off the record.]
    Ms. Durham-Aguilera. OK. Thank you. I'll take the first 
attempt to address and then turn it over to BPA. It's really a 
combination of all three. We monitor the passages. We monitor 
the transport. But, you know, one of the things that we're 
trying to drive for in the region is we still have a consistent 
criteria. And what we really try to get to is a criteria that 
measures juvenile survival, and this is formed by adult 
returns.
    So regarding the spill that happened in 2005, the summer 
spill we keep talking about, until we get the adult returns, 
which won't happen until 2008 and 2009, we won't be able to 
tell how effective they are. We know pretty well what the 
survival rates are, whether it's transport or spill. We need to 
know the adult returns to really know the effectiveness.
    As far as the prediction of by the numbers, it has been 
effective with the various techniques that we use. Also the 
increase had dropped to around 2700. But there's a lot more 
that can be done, you know, as far as the sea lion issue. The 
States of Oregon and Washington are engaged in trying to get 
some relief under the Marine Mammals Protection Act. So they're 
looking to streamline that both under the Act. The Corps of 
Engineers would support either solution in order to make some 
more headway.
    Mr. Maslen. I'm Bill Maslen, Bonneville. I'd just like to 
add that we're also looking to develop returns around the 
effectiveness of transportation. Furthermore, attempting to 
design more comprehensive transport studies to take into 
account the fact that over half of the returns, the adult 
returns from those juvenile fall Chinook are fish that 
overwintered in the system and now migrated the following 
spring. So if any cases weren't even present, it was just the 
lower half of the location when the spill occurred.
    Similarly, in the case of predator control, over the last 
15 years we found the Northern Pikeminnow Management Program to 
be highly effective. That is not just a BPA assessment, that is 
in fact research that's performed by Oregon Department of Fish 
and Wildlife and USGS.
    As a result of our initiatives on modifying summer spill, 
we increased the reward associated and have seen a consistent 
increase in the rate of removal of those predators by about 50 
percent. That will not translate into a 50 percent reduction 
degradation mortality for most fish, but it moves us up into an 
annual exploitation rate from the low teens to the upper teens, 
which is substantial. Currently we're estimating over 25 
percent reduction of predation mortality.
    Miss McMorris. To the two of you again, when it comes to 
measuring the success of saving salmon, how do you believe that 
will be defined over the next ten years and what role will 
customers and others play in defining success.
    Ms. Durham-Aguilera. That's one of the things we're trying 
to do as far as collaboration. It takes everything to be able 
to figure that out. Success, again, it depends on how you're 
going to define it. There's recovery. We all want to hear 
numbers with recovery. We're talking in terms of ten years only 
because that's about as far as we can predict action. But we 
really believe recovery is going to take more than ten years. 
So we have to go back again to a competent agreement with a 
consistent criteria.
    Mr. Maslen. I agree that both collaboration as well as 
focus on recovery, necessarily a long-term and sustainable 
effort. It's only taken European man about 150 years to create 
the situation that we have before us, which includes the 
depressed wild populations of salmon and steelhead. It will 
take decades of focus, prioritization, comprehensive approach 
to costs, all of the human predations, and a sustained effort 
or initiative over time that increases the connectivity of 
those actions to really enhance and will take that more 
holistic approach. That's all.
    Miss McMorris. How much money has been spent on litigation 
since the first biological opinion was challenged.
    Ms. Durham-Aguilera. That's hard to estimate. Again, we do 
our best.
    Mr. Hastings. First, let me thank all of you for your 
testimony. And as I think the people here that are listening 
and certainly the two of us up here can see, that there are 
different opinions on what the solutions are. And that's, I 
guess, what America is all about is to try to figure out the 
best way so that everybody can have their way, so to speak.
    Let me ask Ms. Durham-Aguilera a question here first 
because there's an issue that came to my attention yesterday, 
it came to the parties, that would potentially be affected only 
a couple of days ago regarding drawing down the McNary Pool. I 
understand that you've reached agreement with the local 
irrigators regarding the proposed drawdown of McNary Pool. And 
it's my understanding that this agreement will keep the 
elevation at 336.8 feet; is that correct?
    Ms. Durham-Aguilera. Yes. That's correct. We did reach an 
agreement. We're trying to get around 337.
    Mr. Hastings. Good. I appreciate your working with the 
irrigators. I mean, clearly this was one of those issues that 
came up very quickly that would have had a devastating impact 
in a very hot time of the year. So I appreciate your response 
to the Corps.
    I want to talk to you about your comments. You mentioned 
there's times that you could use that surplus power and use the 
example of potentially filling other reservoirs, Black Rock 
being one of the most obvious. Do you know if that takes any 
legislation at all, or can that be done wholly within the 
purview of BPA and with the utilities working with them? I just 
wonder if you'd look at that.
    Mr. Morrison. I don't really know the answer to that. 
There's a myriad of overlapping regulations and requirements. I 
have to believe that people of good faith could work through 
that. But sometimes, you know, legislation is needed to sort of 
clear a path.
    For instance, thinking of back in the '60s I chaired a 
group that put together a one-stop shopping approach for the 
siting of power plants. And we may need to do something like 
that with this idea of pump and storage so we've got storage 
batteries along the Columbia River system that could be used 
for the release of water for fish and certainly for power 
generation and for refilling McNary Pool. You can go right down 
that list.
    I don't know specifically the answer but just say, usually 
legislation helps where there is a number of different 
bureaucracies.
    Mr. Hastings. That would be something to pursue. Since you 
brought up Black Rock and since the proposal of the Black Rock 
Project is to take water from the Columbia River, I think it's 
worth noting that the whole Columbia Basin Project, we're only 
irrigating about half of that, only takes 3 percent of the flow 
behind Grand Coulee Dam to irrigate that 500,000 acres. And 
then.
    One percent is returned at various points. So when we hear 
a lot of discussion about there's not enough water, that 
statistic, in my mind, kind of applies on the face.
    The proposal for Blackhawk is strong tension in the water 
after you have the full supplement of five rivers downstream. 
So I think that's a point worth making, and I appreciate you 
bringing up the issue.
    Ms. Flores, I want to ask you a question. You talked about 
working trying to get a biological opinion and so forth. My 
question to you is a hypothetical one. If it appears where 
Judge Redden is going with his interpretation of ESA as it 
pertains to our area here, what impact do you think that would 
have on other biological opinions or similar opinions 
throughout the country and if it is subsequently upheld becomes 
in fact the law of the land?
    Ms. Flores. The simple answer would be morbid because I 
assume what you're speaking to is baseline issue and ESA 
consultation and how they take into account the baseline issue. 
And the fact of the matter is if the Ninth Circuit rules on 
that, it could potentially open up a lot of agreements that had 
been reached in a region, whether it's licensing, whether it's 
the Fish and Timber Agreement for the State of Washington. And 
such a ruling could potentially open up those issues and it 
could have an enormous impact.
    Mr. Hastings. What it probably points out more than 
anything else is the need to amend the Endangered Species Act. 
And I might add, because it was mentioned several times in the 
testimony here, the House has passed a version and I want it to 
still be taken up in the Senate.
    But the main part of that is it focuses on recovery. And I 
don't think there's anybody here that I heard said that we 
ought to let the salmon go extinct. In fact, I hear just the 
opposite. We find ways we want to make sure that the salmon is 
part of our culture here. And it seems to me that we would have 
a policy on a national level focusing on recovery that would go 
a long way. And the way that's being interpreted now, at least 
from your point of view, it would have nationwide devastating 
implications. Thank you very much.
    Miss McMorris. I want each of you to comment just briefly 
on just the uncertainty related to our energy costs. And each 
of you have, in your testimony, commented on it. But as we move 
forward there's increased concern about energy costs in this 
country in general. For those of us in the Pacific Northwest, 
we focus a lot on this Columbia Snake River system, electricity 
costs, and we're seeing where these costs have a tremendous 
impact on our economy. I hear from the farmers, I hear from the 
businesses, low income. Everyone is impacted by rising energy 
costs.
    And one of the challenges before us because of the 
continued court battles and the uncertainty that court 
decisions have caused for those of us in this region is that 
the impact of this uncertainty on our electricity costs in this 
region.
    And I just wanted each one of you just to comment from your 
perspective moving forward what that impact would be on your 
particular--from your particular perspective. And I know that 
there's efforts underway to work in a collaborative fashion, so 
those of us from this region the best way to move forward.
    But in the meantime the court decisions and the 
uncertainties that these court decisions cause and the impact 
that they could have, I just want each one of you just to 
comment briefly on what you think the impact will be. And, 
Gary, I was going to ask you to start.
    Mr. Chandler. I was afraid you were going to start with me 
first. There's several things that I think we can give you to 
look at. First of all, our association is a big supporter of 
looking at alternative sources, and I think some of that 
technology is here, some of it is away still being developed. 
One of the things we're faced with right now on our energy 
costs, as I said in our testimony, I would venture to say that 
the majority of our membership is very, very nervous right now 
for energy costs going up.
    And a lot of our larger businesses are not looking here to 
expand or to build new facilities, they're just struggling to 
hang on and looking at closing and moving elsewhere because of 
the uncertainty of energy costs.
    We've got big movement going on in wind power right now. 
But I want to remind everybody wind power is great when the 
wind blows, but as soon as the wind quits blowing, you just 
can't shut the plant down and send everybody home. You have to 
have something there when the wind power is not being 
generated. But we think we need to move forward with that.
    I think there's coal, but everybody has problems around 
coal because of the emissions. There is technology looking at 
converting coal and liquefying it. And you know my previous 
thoughts, Congresswoman McMorris, on water. I still think we're 
missing the boat. We have a lot of water, but we utilize it and 
we misutilize it and we flush a lot of it down without 
containing it in storages.
    I still believe one of the things that Congress should be 
looking at is reinvigorating the Corps of Engineers and looking 
at building more storage so we can have that storage for use 
for power. We could have the storage for expansion of 
agricultural. We know we have a lot of areas that we have deep 
wells and we need to get them off of those deep wells and we 
need water for that. So storage to me would be a real key, as 
well as storage is good for recreation and for the salmon. So I 
think any of those things.
    Miss McMorris. Very good. And I'm going to have to ask you 
to be brief in your comments.
    Mr. Voigt. Thank you, Congresswoman. Regarding potato 
industry and costs, our worst thing to do is increase costs. I 
know I still missed testimony. I know his about rate increases 
has been over close to 280 percent increase. Electricity is 
secondary to the actual supply of water. If we don't have 
water, we don't get the electricity.
    Ms. Miles. On behalf of the CRITFC Tribes, we are a 
supporter of alternative energy. We have been a collaborative 
partner. We have pushed the Federal agencies to work with us 
without going to the last resort. And that has been, I think, 
commendable on the Tribes' behalf because we have borne the 
conservation burden, and all we're asking is that conservation 
burden be applied to all parties so that we can jointly live 
the lifestyles that I hear some of the people talking about on 
the panel today. Thank you.
    Ms. Flores. My answer to that would be, I think, the same 
as Chandler's, that pointed out that businesses here in the 
Northwest are just hanging on. The fact of the matter is many 
of them have gone out of business. Energy has been a 
traditional advantage in the Northwest. That's still true 
today. We have businesses that have to overcome other higher 
costs like transportation, so electricity is key to their 
competitiveness.
    And I'm going to say we're at a point where there's not a 
lot of room for electricity prices to go up without having a 
significant and negative impact on the region and its economy.
    Ms. Hirsh. There are a number of things that affect 
electric rates. And even if rates go up, bills can go down. And 
I'd like to see an increased focus on more aggressive energy 
efficiency implementation and conservation efforts throughout 
the region to help bring bills down.
    And there's a number of issues around the country that are 
driving electric rates up all over, so the Northwest is not 
unique in that problem--facing that problem. But we are blessed 
with tremendous opportunity to improve the efficiency and 
reduce consumers' bills and keep businesses more competitive. 
The Northwest Power and Conservation Council estimates $2.4 
billion in lost economic development opportunity, and I don't 
think that's an economic impact we can bear.
    Ms. Durham-Aguilera. Well, thank you. I'll speak from the 
viewpoint as the engineer. We're charged to operate the system 
for the purposes of the people and for the environment. That's 
why we spent so much time on water control plants because we're 
also responsible to let people know what we're doing so they 
have a predictable and reliable plan. Without that, people 
can't make wise investments. So we have certain operation, we 
have a certain plan for the economy to make smart business and 
investment decisions. So that leads to cost and efficiencies 
and loss of energy.
    And then the second point is kind of a broader view. One of 
the things I worry about is that we don't have a true long-term 
investment plan so we will not in the future continue to see 
the value on this.
    Mr. Maslen. I'll narrow my comments to fish and wildlife. 
We believe that the key to success is an ``all H'' approach. We 
have to take that comprehensive and holistic approach. BPA can 
only cover costs to some point. So where there's uncertainty, 
it makes it difficult to design and sustain programs that can 
be implemented over time. So we have all four H's. We have 
costs in all four H's. As pressures are brought to bear on one 
of those H's, there can be pressures in the alternative 
direction on the other. And that makes it hard to implement a 
successful program in the long term.
    Mr. Morrison. I think the energy future is a timing issue. 
We have water. We have wind. In order to supply water for both 
power and fish, we have to solve this problem, as Steve Wright 
mentioned that we only have storage capacity for 30 percent on 
the Lower Columbia River. The other 70 percent we're sending 
out to the Pacific Ocean.
    So to me when the wind blows, store the water. When you 
need the water, let it come out of reservoirs along the 
Columbia River system.
    Mr. Cooper. I would just say that from the perspective of 
my colleagues nationally, you're going to be hearing a lot more 
from us in terms of increased demands on a whole range of 
indirectly related but still connected needs that will occur in 
the lives of low-income people around the country.
    As pressure is applied on a utility budget for a low-income 
household, they're going to make choices, some good, some bad, 
as they seek to pay that bill or to offset that increase. So 
you're going to see increased demands for not just energy 
assistance but housing, there's going to be an increase in 
illness as people are not able to afford health care, 
prescription costs are going to see an increase in charity 
costs right off to the health care system, you're going to see 
an increase in demands for shelters, increase in family 
instability, crime rates, all of those kinds of things.
    Mr. Espinoza. In Pasco with growing populations, we build 
more schools, and we end up with higher electric fees. And, 
again, I guess I want to say that there's a lot of pressure to 
add accountability into what public education does, not just 
here in Washington State but nationally with No Child Left 
Behind and the individual DIEA law. But in Washington state, 
just to help you understand our intensity and what we're doing 
in our classrooms, is the WASL, Washington Academic Student 
Learning. Thank you. A little bit of pressure. The Washington 
Assessment of Student Learning.
    It became a graduation requirement for sophomores this 
year, and preliminary results show that only 54 percent of the 
students statewide passed. But there's a number of other 
subgroups of students that last year 70 percent or more did not 
pass the math portion. So the emphasis on keeping educational 
dollars in our classrooms is something that I guess I just need 
to let you know that. It's a very strong thing.
    Mr. Reimann. I wish Steve Wright was still here because 
when I was listening to him talk I couldn't help but think of a 
quote from Ronald Reagan and it was the most terrifying words 
in the English is, I'm here from the government and I'm here to 
help.
    What's happening to us with the power rates is after the 
last round we decided to sell our farming operation. The 
problem is mortgage companies, because of the uncertainty of 
the power rates, aren't willing to loan on this type of 
operation anymore. So it's very difficult to go out there and 
market your property.
    I have a granddaughter that's half Russian. She speaks 
Russian fluently. We just came back last fall from Russia and 
went back to the place where my grandfather came in 1880. And 
believe it or not, I never thought I would ever say this, is 
that the opportunity for farmers like myself and my son and my 
granddaughter look greater in Russia than they do here today.
    Mr. Hastings. We've come to the end, gone over a little 
bit, so this will be the last question. I want to thank all of 
you. I apologize if I didn't ask all of you a question today. 
But I do have a couple I do want to ask. Ms. Miles, I want to 
ask you your position on the use of hatchery fish and if we can 
supplement the salmon populations.
    Ms. Miles. What was the question?
    Mr. Hastings. The question is, what is your position, 
CRITFC or individually, what is your position on using 
hatcheries to supplement salmon populations?
    Ms. Miles. Our view on our hatcheries is that we do need 
hatcheries to support an eventually natural sustainable run. 
Currently, that cannot happen without hatcheries in our 
supplementation programs. I understand the controversy over 
supplementation, but at the same time the CRITFC Tribes, who I 
believe are the strongest fish managers in the region, 
understand that hatchery supplementation programs do have to 
support eventually to get a--the goal is to get a harvestable, 
sustainable salmon run, which we just can't do at this time.
    Mr. Hastings. Can I expand that to say that you support the 
four H's then?
    Ms. Miles. In the four-H approach, all four H's need to be 
addressed equitably and how those gaps are achieved need to be 
achieved equitably, which under a confidential process under 
the collaboration process we're working toward, but these need 
to be addressed. It would be very good if the public understood 
how each H affects the actual run and how that affects each 
part of the gap and how could you then be responsible and 
accountable for filling the gap. And that's kind of where we're 
at.
    Mr. Hastings. Can I assume that when you come out with your 
proposal and your reform, you will address that?
    Ms. Miles. In our view the Tribes have--we have always 
addressed our H, which is harvest. We have always been asked to 
address that. And when I mentioned conservation burden, we have 
wholeheartedly had to take on the conservation burden. And in 
that ``all H'' approach, we ask that conservation be applied 
equitably. I'm not saying we're opposed to the four-H approach, 
but it's how you view that four-H approach and how you view 
each gap in that approach.
    Mr. Hastings. I wanted to ask about hatcheries because I 
don't think there's been enough, frankly, work or study on 
hatcheries. But I appreciate your answers.
    The final question that I have is to Mr. Reimann. There's 
been a lot of discussion here today regarding Judge Redden and 
the potential that comes out of that, and I know that you've 
been very active and are effective as part of the Columbia 
Snake River Irrigators Association. I understand there is an 
attempt to move this to another court. Would you elaborate on 
that?
    Mr. Reimann. Well, we've tried a lot of measures with Judge 
Redden. One of them was to have him removed from the case, and 
so far there's been no luck with that. It's just another 
attempt. Whether we get there or not, we can remain hopeful. 
But, you know, I think it was Al Gore who brought him out of 
retirement to do just this, and he's done a wonderful job of 
stuffing us. Maybe he'll go back into retirement.
    Mr. Hastings. Well, OK. I see that my time is just about 
up. And once again, I want to thank my colleague from Kettle 
Falls for pushing to have this meeting out here. I thought the 
testimony was very good, and I appreciate all of your coming 
and your presence here. And all the people in the audience that 
sat through this, we certainly appreciate your presence here 
too. Thank you.
    Miss McMorris. Very good. We do need to conclude the 
hearing today. There will be a number of questions that we will 
submit to you in writing. We would ask that you would answer 
those so that they could be a part of the official record.
    I want to also thank everyone for being here today, for 
testifying, for taking time to be here. We all have a goal as 
we're here today of protecting salmon as well as our economy. 
The question is, how are we going to do that and whether we're 
going to do it together? And I think these kind of hearings are 
a positive step in pulling people together to make that happen.
    I look forward to working with you and my colleagues so 
that we can come up with a win-win situation. Thank you very 
much.
    That's the conclusion.
    [Whereupon, at 11:10 a.m., the Subcommittee was adjourned.]

    [A statement submitted for the record by Charles L. Dawsey, 
General Manager-EVP, Benton Rural Electric Association, 
follows:]

   Statement submitted for the record by Charles L. Dawsey, General 
             Manager-EVP, Benton Rural Electric Association

    Thank your for the opportunity to share thoughts and comments 
regarding dams and Northwest power issues. My name is Charles Dawsey, 
and I am the General Manager of the Benton Rural Electric Association--
the consumer owned electric utility serving over 15,000 meters in 
Benton and Yakama counties. Currently our utility receives all of its 
wholesale power from the Bonneville Power Administration pursuant to 
the terms and conditions of a BPA Full Requirements Power Sales 
Contract. Wholesale power costs from BPA are still over 60% higher than 
they were prior to 2001. In general, this means that end use electrical 
consumers have faced increases in retail rates well over 30% during the 
past five years. I would suggest that anyone involved in the electric 
utility industry, myself included, should be ashamed of these 
significant energy cost increases in a region where hydroelectric 
energy is so abundantly available.
    I applaud and appreciate Congresswoman McMorris' effort to 
legislatively secure transparency regarding the costs of fish and 
wildlife programs that northwest electric consumers are paying as part 
of their power bill. It is critical that consumers know what these 
program costs are, as well as the benefits that are being achieved.
    In 1984 and 1985, the BPA Federal Base System of generation on the 
Columbia River was able to produce 9,750 aMW of energy during a 
critical water year. Today, the same Federal Base system can produce 
only of 7,079, aMW of energy during a critical water year, a reduction 
due in a large part to the implementation of the requirements of 
various Biological Opinions and resulting fish and wildlife programs. 
In short, the region has lost about 2,671 aMWs of generating capability 
during critical water, which is the equivalent of the amount of energy 
needed to supply two cities the size of Seattle. In today's energy 
market this 2,671 aMWs of energy has a wholesale value of $1.1 Billion.
    For the most part, the Northwest has been able to accommodate the 
loss of this generation capability through a number of mechanisms, 
including the loss of aluminum production, the installation of high 
cost combustion turbine generation, and a slowing of northwest economy. 
However, as the Northwest economy picks up speed and energy demand 
grows, we will be facing some difficult challenges to meet the future 
energy needs of this region.
    The Benton Rural Electric Association supports the development of 
renewable generation both directly through our subscription ownership 
in the Coffin Butte Landfill Generation Project which utilizes methane 
gas from the landfill to produce electricity, to our indirect support 
of member-owned renewable distributed generation projects. We realize 
that many of these renewable energy projects provide economic 
development opportunities to landowners and equipment vendors, and, if 
privately owned, can add to the local tax base of our counties.
    However, these renewable energy projects, including wind 
generation, rely heavily on financial subsidies, and equally important 
rely on existing conventional generation to provide backup, firming, 
shaping and other ancillary services to make them a viable energy 
alternative. To this end, BPA has used the flexibility of the 
federally-owned hydroelectric projects to provide these services at 
relatively no cost to the renewable projects. The BPA Administrator has 
announced that the Agency is incapable of providing any additional 
ancillary services to intermittent generation projects. Any new 
renewable projects will need to rely on firming services from a 
resource other than the BPA Federal Base System. This will require the 
development of new conventional resources to ensure that the shaping 
and backup services for new renewable resources are available. In 
short, this boils down to more rate increases to the end use electrical 
consumer.
    In conclusion, while we support renewable resource development, we 
recognize that these resources will not replace the need for base load 
generation to meet a growing economy. In fact, quite the opposite is 
true, since renewable resource development will place additional burden 
on conventional base load capacity. We urge all decision makers that 
will face tough decisions regarding future energy resources, to at 
lease reconsider the opportunity to capture some of the 2,671 aMW of 
lost hydroelectric generation on the Federal Base System. This 
generation has no additional capital or operating costs associated with 
its production. It is without a doubt the most cost-effective renewable 
resource that is available to us today.
    In closing, I want to thank Congresswoman McMorris and Congressman 
Hastings for scheduling this hearing, and for their constant vigil in 
protecting and securing the benefits of the Bonneville Power 
Administration for ratepayers of the Northwest.
    Thank you for your attention.

                                 
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