[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                          PROTECTING FEDERAL 
                        HYDROPOWER INVESTMENTS 
                             IN THE WEST: 
                      A STAKEHOLDER'S PERSPECTIVE 

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

                           OVERSIGHT HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                         Wednesday, May 4, 2011

                               __________

                           Serial No. 112-27

                               __________

       Printed for the use of the Committee on Natural Resources



         Available via the World Wide Web: http://www.fdsys.gov
                                   or
          Committee address: http://naturalresources.house.gov

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                     COMMITTEE ON NATURAL RESOURCES

                       DOC HASTINGS, WA, Chairman
             EDWARD J. MARKEY, MA, Ranking Democrat Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Louie Gohmert, TX                    Eni F.H. Faleomavaega, AS
Rob Bishop, UT                       Frank Pallone, Jr., NJ
Doug Lamborn, CO                     Grace F. Napolitano, CA
Robert J. Wittman, VA                Rush D. Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Mike Coffman, CO                     Jim Costa, CA
Tom McClintock, CA                   Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Jeff Denham, CA                          CNMI
Dan Benishek, MI                     Martin Heinrich, NM
David Rivera, FL                     Ben Ray Lujan, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Scott R. Tipton, CO                  Betty Sutton, OH
Paul A. Gosar, AZ                    Niki Tsongas, MA
Raul R. Labrador, ID                 Pedro R. Pierluisi, PR
Kristi L. Noem, SD                   John Garamendi, CA
Steve Southerland II, FL             Colleen W. Hanabusa, HI
Bill Flores, TX                      Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Charles J. ``Chuck'' Fleischmann, 
    TN
Jon Runyan, NJ
Bill Johnson, OH

                       Todd Young, Chief of Staff
                      Lisa Pittman, Chief Counsel
                Jeffrey Duncan, Democrat Staff Director
                 David Watkins, Democrat Chief Counsel
                                 ------                                

                    SUBCOMMITTEE ON WATER AND POWER

                      TOM McCLINTOCK, CA, Chairman
            GRACE F. NAPOLITANO, CA, Ranking Democrat Member

Louie Gohmert, TX                    Raul M. Grijalva, AZ
Jeff Denham, CA                      Jim Costa, CA
Scott R. Tipton, CO                  Ben Ray Lujan, NM
Paul A. Gosar, AZ                    John Garamendi, CA
Raul R. Labrador, ID                 Edward J. Markey, MA, ex officio
Kristi L. Noem, SD
Doc Hastings, WA, ex officio

                                 ------                                






























                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, May 4, 2011...........................     1

Statement of Members:
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................     6
        Prepared statement of....................................     7
    McClintock, Hon. Tom, a Representative in Congress from the 
      State of California........................................     1
        Prepared statement of....................................     3
    Napolitano, Hon. Grace F., a Representative in Congress from 
      the State of California....................................     4
    Noem, Hon. Kristi, a Representative in Congress from the 
      State of South Dakota......................................     8
    Tipton, Hon. Scott R., a Representative in Congress from the 
      State of Colorado..........................................     6

Statement of Witnesses:
    Corwin, R. Scott, Executive Director, Public Power Council, 
      Portland, Oregon...........................................     9
        Prepared statement of....................................    10
    Fahlund, Andrew, Senior Vice President for Conservation, 
      American Rivers, Washington, D.C...........................    22
        Prepared statement of....................................    24
    Gillen, Roman, President and CEO, Consumers Power, Inc., and 
      President, Oregon Rural Electric Cooperative Association, 
      Salem, Oregon..............................................    29
        Prepared statement of....................................    30
    Karier, Tom, Washington Council Member, Northwest Power and 
      Conservation Council, Portland, Oregon.....................    32
        Prepared statement of....................................    33
    Morgan, Chris, Board President, Colorado Rural Electric 
      Association, and Board Member, Gunnison County Electric 
      Association, Gunnison, Colorado............................    15
        Prepared statement of....................................    17
    Simmons, Vic, General Manager, Rushmore Electric Power 
      Cooperative, Rapid City, South Dakota......................    20
        Prepared statement of....................................    21
    Ward, Grant, Water and Power Consultant, Maricopa-Stansfield 
      Irrigation District, Maricopa, Arizona.....................    38
        Prepared statement of....................................    39



OVERSIGHT HEARING ON ``PROTECTING FEDERAL HYDROPOWER INVESTMENTS IN THE 
                  WEST: A STAKEHOLDER'S PERSPECTIVE.''

                              ----------                              


                         Wednesday, May 4, 2011

                     U.S. House of Representatives

                    Subcommittee on Water and Power

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:01 a.m. in 
Room 1324, Longworth House Office Building, The Honorable Tom 
McClintock [Chairman of the Subcommittee] presiding.
    Present: Representatives McClintock, Tipton, Gosar, 
Labrador, Noem, Hastings, Napolitano, and Garamendi.
    Also present: Representative DeFazio.
    Mr. McClintock. The Subcommittee on Water and Power will 
come to order. The Chair notes the presence of a quorum, which 
under Committee Rule 3[e] is two Members.
    The Water and Power Subcommittee meets today to hear 
testimony at this oversight hearing entitled ``Protecting 
Federal Hydropower Investments in the West: A Stakeholder's 
Perspective.'' We also meet under the mandate of House 
Resolution 72, to identify regulatory impediments to job 
creation.
    The Chair will begin by asking unanimous consent that the 
gentleman from Oregon, Mr. DeFazio, be allowed to sit with the 
Subcommittee and participate in the hearing. Without objection, 
so ordered.
    We will begin with five-minute opening statements by myself 
and the Ranking Member, followed by the Subcommittee Members, 
and I will begin by recognizing myself for five minutes.

STATEMENT OF HON. TOM McCLINTOCK, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. McClintock. The purpose of today's hearing is to 
receive testimony on the benefits that hydroelectricity offers 
to our nation's prosperity, the impediments hydroelectricity 
generators now face, and the costs that these impediments 
impose on the family budgets of millions of Americans, and on 
job creation at a time when Americans suffer the most prolonged 
period of high unemployment since the Depression.
    Hydropower is by all accounts the cheapest and cleanest 
electricity available to modern technology. Its cost is 
typically estimated at between a half a cent and three cents 
per kilowatt hour compared with the subsidized cost of more 
than 14 cents per kilowatt hour for solar power and, of course, 
without those subsidies, it would be much, much higher. 
Hydroelectricity produces zero air emissions, and yet no major 
hydroelectricity facility has been built in many years and our 
existing facilities are being bled dry by endless litigation 
and regulatory obstacles that result in major increases in 
electricity prices and chronic shortages of electricity.
    Earlier this year this Subcommittee heard from the Federal 
agencies charged with producing and delivering hydropower. It 
became painfully clear that crushing new costs continue to be 
heaped on our electricity bills from overregulation, water use 
restrictions, and mandated use of so-called alternative energy 
sources. Worse, it became apparent that there are no plans 
actually being implemented to increase our hydroelectric 
generation through the construction of major new facilities.
    We see around us the wreckage of these retrograde policies. 
California, which boasts of being on the cutting edge of this 
folly, now suffers the highest electricity prices in the 
continental United States, chronic shortage of capacity, per 
capita electricity consumption that is now lower than Guam and 
Aruba, and an economy that leads the Nation from the bottom. 
This must not be America's future.
    Our water and power pioneers had the vision of constructing 
large multi-purpose facilities to make the desert bloom and to 
provide low cost, emissions-free energy. The cheap and abundant 
hydroelectricity generated in the West's Federal dams played a 
major role in producing the armaments and food necessary to 
defeat our enemies in World War II, and it laid the foundation 
for the explosive economic growth and prosperity of the western 
United States in the post-war years.
    This Administration purports to support hydroelectricity 
through press releases, yet actions speak louder than words. It 
continues to pursue the destruction of four hydroelectric dams 
on the Klamath that produce enough electricity for more than 
150,000 homes. The capital cost of doing so is more than half a 
billion dollars on top of crushing replacement costs, on top of 
the loss of the Iron Gate Fish Hatchery that releases 5 million 
salmon smolt each year.
    It continues to fund extremist organizations like the one 
invited by the Minority Party today whose president has said 
that the destruction of these dams would be a model for the 
demolition of four additional dams on the Snake River that 
produce enough electricity for 1.1 million homes, adding a half 
billion dollars per year just in replacement costs.
    It continues to pursue high-flow spillage from the Glen 
Canyon Dam that wastes millions of dollars of lost electricity 
production, and ironically increases predator populations that 
devour endangered humpback chub. Upstream it has its sights on 
the Aspinall Unit in western Colorado. We will hear today that 
30 percent of the electricity bills that families in the 
Pacific Northwest are just to meet environmental regulations.
    Protecting endangered species is a worthy goal and worthy 
goals need to be pursued with common sense and sound science, 
not left-wing ideology and junk science. We need to ask whether 
the enormous wealth that is being consumed by these policies 
has made any significant contribution to enhancing endangered 
populations compared to far less expensive and effective 
alternatives, including predator control, increasing overall 
water supplies, and hatchery production. As far as I can tell, 
the principal beneficiaries of current policies have been the 
law firms and environmental fund raising organizations and the 
principal victims have been the families and workers who face a 
dismal future of rationing, shortages, prohibitively expensive 
water and power, and a dying economy.
    It is the purpose of these hearings to begin moving the 
pendulum back toward sensible and proven policies that build 
our hydroelectricity infrastructure. Today we will hear from 
leading experts from outside the Beltway whose work is 
dedicated to providing for the needs of a growing population. 
Their insights on hydropower policy will provide this 
Subcommittee with guidance to restore the Federal Government as 
a positive force for prosperity, abundance, and plenty once 
again.
    With that I will recognize our Ranking Member for an 
opening statement of five minutes.
    [The prepared statement of Mr. McClintock follows:]

         Statement of The Honorable Tom McClintock, Chairman, 
                    Subcommittee on Water and Power

    The purpose of today's hearing is to receive testimony on the 
benefits that hydroelectricity offers to our nation's prosperity, the 
impediments that hydroelectricity generators now face, and the costs 
that these impediments impose on the family budgets of millions of 
Americans and on job creation at a time when American suffer the most 
prolonged period of high unemployment since the Depression.
    Hydropower is by all accounts the cheapest and cleanest electricity 
available to modern technology. Its cost is typically estimated at 
between a half-cent and three cents per kilowatt hour, compared with 
more than 14-cents per kilowatt hour for solar power. It produces zero 
air emissions.
    And yet, no major hydro-electric facility has been built in many 
years, and our existing facilities are being bled dry by endless 
litigation and regulatory obstacles that result in major increases in 
electricity prices and chronic shortages of electricity.
    Earlier this year, this subcommittee heard from the federal 
agencies charged with producing and delivering hydropower. It became 
painfully clear that crushing new costs continue to be heaped onto our 
electricity bills from over-regulation, water use restrictions and 
mandated use of so-called alternative energy sources. Worse, it became 
apparent that there are no plans actually being implemented to increase 
our hydro-electric generation through construction of major facilities.
    We see around us the wreckage of these retrograde policies. 
California, which boasts of being on the cutting edge of this folly, 
now suffers the highest electricity prices in the continental United 
States, chronic shortage of capacity, per capita electricity 
consumption that is now lower than Guam and Aruba, and an economy that 
leads the nation--from behind. This must not become America's future.
    Our water and power pioneers had the vision of constructing large 
multi-purpose facilities to ``make the desert bloom'' and to provide 
low cost, emissions-free energy. The cheap and abundant 
hydroelectricity generated in the west's federal dams played a major 
role in producing the armaments and food needed to defeat our enemies 
in World War II. And it laid the foundation for the explosive economic 
growth and prosperity of the western United States in the post-war 
years.
    This Administration purports to support hydropower through press 
releases, yet actions speak louder than words:
    It continues to pursue the destruction of four hydroelectric dams 
on the Klamath that produce enough electricity for more than 150,000 
homes. The capital cost is more than half a billion dollars, on top of 
crushing replacement costs, on top of the loss of the Iron Gate Fish 
Hatchery that releases 5 million salmon smolt each year.
    It continues to fund extremist organizations like the one invited 
by the minority party today, whose President has said the destruction 
of these dams would be a model for the demolition of four additional 
dams on the Snake River that produce enough electricity for 1.1 million 
homes--adding a half-billion dollars per year just in replacement 
costs.
    It continues to pursue high flow spillage from the Glen Canyon Dam 
that wastes millions of dollars of lost electricity production and 
ironically increases predator populations that devour endangered 
humpback chub. Upstream, it has its sights on the Aspinall Unit in 
western Colorado.
    We will hear today that thirty percent of the electricity bills of 
families in the Pacific Northwest are just to meet environmental 
regulations.
    Protecting endangered species is a worthy goal and worthy goals 
need to be pursued with common sense and sound science, not left-wing 
ideology and junk science. We need to ask whether the enormous wealth 
that has being consumed by these policies has made any significant 
contribution to enhancing endangered populations compared to far less 
expensive and effective alternatives, including predator control, 
increasing overall water supplies and hatchery production. As far as I 
can tell, the principal beneficiaries of current policies have been the 
law-firms and environmental fundraising organizations--and the 
principal victims have been families and workers who face a dismal 
future of rationing, shortages, prohibitively expensive water and power 
and a dying economy.
    It is the purpose of these hearings to begin moving the pendulum 
back toward sensible and proven policies that built our hydro-electric 
infrastructure. Today, we will hear from leading experts from outside 
the beltway whose work is dedicated to providing for the needs of a 
growing population. Their insights on hydropower policy will provide 
this subcommittee with guidance to restore the federal government as a 
positive force for prosperity, abundance and plenty once again.
                                 ______
                                 

    STATEMENT OF HON. GRACE NAPOLITANO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Napolitano. Thank you, Mr. Chairman.
    Today's hearing focuses on protection of our existing 
hydropower resources and restoring production, assuming the 
continuation of which by definition describes plentiful 
quantities of fish or supply. An abundance of hydropower in the 
Pacific Northwest is reminiscent of how electricity from the 
Columbia River powered aluminum plants in shipyards, enabling 
us to win World War II. Equally embedded into the Pacific 
Northwest culture is the role of fisheries in the region 
whether it is through rights and traditions of a salmon harvest 
for Native Nations or during the abundant times of the 1860s 
and 1960s when commercial fisheries actually annually harvested 
millions of pounds of fish and salmon, thereby fueling their 
local economy.
    Let us acknowledge what abundance means to everybody. What 
it means to generations of fishermen, the Native American 
Tribes, what abundance means to generations of recreational 
enthusiasts, what it means to water and power perspective, and 
what it means to restoring our environment and commercial 
fisheries. The vision of abundance is not an isolated view.
    There is no argument about the important role hydropower 
has played and continues to play in meeting our energy demands 
all over the West. Changes since that time, dams have been 
built which include, of course, the changes in those areas 
include climate change, environmental, tribal water rights, 
population shifts, and increases. We have to face all the 
realities and work together to find the solutions.
    As Mr. Fahlund aptly mentioned in the written testimony, 
environmental quality is not a luxury good. Leaving our 
children with the burden of environmental deficit is no less 
insidious than leaving them with the burden of a financial one. 
To find that balance requires leadership and cooperation on all 
levels, leadership exemplified by local stakeholders like in 
the Klamath Basin where farmers, tribal leaders, and 
environmentalists reached a historic agreement that would 
preserve farming in the region, restore our environment, and 
meet our trial trust responsibilities. We seem to forget that 
Native Americans have the first right to water.
    Leadership like in the Yakima region where farmers and 
environmentalists are working together on developing and 
creating new water supplies by taking into account the needs of 
the environment. Leadership like in the Colorado region where 
stakeholders and water users work together to implement the 
multi-species habitat conservation plan while allowing for 
water and power deliveries to continue in accordance with state 
and Federal laws.
    Our local communities must be commended for their courage 
and their leadership in creating these collaborate 
partnerships. They are not looking to blame. They are looking 
for solutions. If we want to preserve hydropower as a resource 
for the future, we must support these collaborative efforts as 
well as look at the efficiencies, the new technologies, and the 
alternative power sources, like solar, wind, geo, just to name 
a couple, to help meet our future demands.
    I know that Northwest delegation is actively looking at 
solutions to support the development of renewals while 
protecting their hydropower resources and operation integrity 
of the BPA grid. The issue of high wind, high water where power 
supply is exceeding demand is a challenge but it is a challenge 
that can possibly be solved.
    As I have stated at our PMA budget hearing on March, I 
would like to offer any help in facilitating a solution to this 
discussion since California depends on the renewables generated 
in the Northwest Region.
    I see I have a couple of moments and I would like to, of 
course, state that I have looked at the statements that were 
submitted for the record with great interest, and I find that 
there are some concerns, and quite a few concerns in increasing 
rates, but I most pose a question to all of you. If we are not 
able to help the grids or the PMAs be able to--what do I say--
increase the capability, increase the generation of power by 
adding new technology or by replacing some of the old turbines, 
by assisting them in being able to create a better environment, 
how else are you going to be able to meet it if you do not 
increase the rates, at least for a portion of time? To me, that 
is a serious question and, yes, it will mean--of course, the 
point was made that some of the folks that would be least able 
to pay for that increase would be people on fixed incomes. We 
have issues with that, yes, but it is also true that most of 
those are waived by the electric companies.
    With that, I thank our witnesses for being here today. We 
look forward to your testimony.
    Mr. McClintock. The Chair would ask unanimous consent to 
allow Mr. Tipton to go out of order. He has an urgent matter 
that he has to attend to following his comments, so without 
objection Mr. Tipton for five minutes.

 STATEMENT OF HON. SCOTT TIPTON, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF COLORADO

    Mr. Tipton. Good morning and thank you, Chairman McClintock 
and Ranking Member Napolitano for convening this important 
hearing today. I would like to take this opportunity to be able 
to welcome one of my constituents, Mr. Chris Morgan. Chris is 
the President of the Colorado Rural Electric Association and a 
board member for the Gunnison County Electric Association.
    Skyrocketing energy prices make the topic of today's 
hearing very timely. These high energy prices and the state of 
the economy make low-cost energy sources like hydropower more 
important than ever. Hydropower is unquestionably the most 
affordable and reliable form of renewable energy on the market 
today. Unfortunately, efforts by this Administration are 
threatening access to this carbon-free power source. The 
decision made in Washington have a direct effect on all 
stakeholders in the real world, so I am very interested to hear 
from Chris and our other witnesses, and again, Mr. Chairman, 
Ranking Member, thank you so much for this consideration 
allowing me to go a little early. Thank you.
    Mr. McClintock. The Chair is now pleased to recognize the 
Chairman of the Natural Resources Committee, Congressman Doc 
Hastings of Washington.

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

    Mr. Hastings. Thank you very much, Mr. Chairman, and thank 
you very much for the courtesy of allowing me to be here today.
    This hearing is a valuable opportunity to discuss Federal 
hydropower and the importance of protecting low-cost renewable 
energy and the jobs that it creates. We are fortunate to be 
joined by witnesses who have firsthand knowledge of what 
hydropower brings to their communities and to their ratepayers. 
I would especially like to thank our Pacific Northwest 
witnesses for being here today, and I also want to welcome many 
in the audience from the rural utilities who have taken time to 
attend this hearing.
    My district in central Washington contains the heart of the 
Federal Columbia River Power System. This network of Federal 
dams and reservoirs has provided emission-free, reliable 
hydropower for generations. It is our duty to make this 
affordable renewable energy source, make sure that it continues 
into the future.
    However, these investments and economic drivers are under 
constant assault. They are repeatedly targeted by bureaucratic 
regulation, lawsuits, and even the whims of the Federal judge. 
According to the Bonneville Power Administration, over 1,000 
megawatts, or enough energy to power one million homes, has 
already been lost in recent years to salmon recovery efforts.
    However, many salmon recovery programs are working. How do 
you measure that? You measure that by the high number of salmon 
returning to the rivers, but for some that is simply not 
enough. There are organizations whose singular focus appears to 
be to destroy dams and the hydropower they produce, and I would 
like to note, as the Chairman pointed out, that one of the 
organizations testifying here is a party to an almost decade-
long litigation aimed at breaching the four lower Snake River 
dams--this despite the Northwest Power and Conservation 
Council's finding that such removal would, and I quote, 
``increase the carbon emissions, cost and risk of the regional 
power system.''
    I can emphatically tell you that as long as I am Chairman 
of this Committee and as long as I am a member of this 
Congress, these dams will remain intact and functioning. They 
will not be breached, removed or destroyed. The people of the 
Northwest understand that dam removal is an extreme action that 
drives up energy costs and won't help recover fish.
    There are those who live outside the Pacific Northwest who 
fail to understand the important multiple functions these dams 
serve. In addition to providing most of the power for the 
region, these dams provide flood control, barge transportation 
of agricultural commodities, irrigation, recreation, and they 
ensure the reliability of other renewable energy sources. In 
addition to protecting existing resources, we must also be 
looking at how we can create more hydropower through new water 
storage, canal-based hydropower and other measures. Everything 
to create more hydropower should be on the table. Efforts to 
eliminate this low-cost renewable energy or to drive up its 
costs will be emphatically resisted by this Committee.
    To be clear, a true commitment to renewable energy requires 
a commitment to protecting existing hydropower dams and the 
many benefits that they provide. I am committed and have been 
committed to pursuing all of the above energy approach for our 
nation. This is a top priority for the Natural Resources 
Committee. Hydropower is a key part of this strategy. We simply 
need more of this original renewable energy. For that reason I 
commend the Subcommittee Chairman and Ranking Member for having 
this hearing, and I look forward to working with you on this 
legislation that may be produced by this Committee, and as the 
Chairman said, it all starts with today's hearing. Once again, 
thank you for your courtesy. I yield back.
    [The prepared statement of Mr. Hastings follows:]

          Statement of The Honorable Doc Hastings, Chairman, 
                     Committee on Natural Resources

    This hearing is a valuable opportunity to discuss federal 
hydropower and the importance of protecting the low-cost, renewable 
energy and jobs it creates. We're fortunate to be joined by witnesses 
who have firsthand knowledge of what hydropower brings to their 
communities and ratepayers. I'd especially like to thank our Pacific 
Northwest witnesses for being here today. I also want to welcome many 
in the audience from the rural electric utilities who have taken the 
time to attend this hearing.
    My district in central Washington contains the heart of the Federal 
Columbia River Power System. This network of federal dams and 
reservoirs has provided emissions-free, reliable hydropower for 
generations. It's our duty to make sure this affordable, renewable 
energy source continues well into the future.
    However, these investments and economic drivers are under constant 
assault. They are repeatedly targeted by bureaucratic regulation, 
lawsuits, and even the whims of a federal judge. According to the 
Bonneville Power Administration, over 1,000 megawatts--or enough energy 
to power one million homes--has already been lost in recent years due 
to salmon recovery efforts. However, many salmon recovery programs are 
working based on the high number of salmon returning to the rivers. But 
for some, that's simply not enough. There are organizations whose 
singular focus appears to be to destroy dams and the hydropower they 
produce.
    I'd like to note that one of the organizations testifying here 
today is a party to the almost decade-long litigation aimed at 
breaching the four lower Snake River dams. This, despite the Northwest 
Power and Conservation Council's finding that such removal would 
``increase the carbon emissions, cost and risk of the regional power 
system.'' I can emphatically tell you that as long as I'm Chairman of 
this Committee, and as long as I'm serving in Congress, these dams will 
remain intact and functioning. They will not be breached, removed, or 
destroyed. The people of the Pacific Northwest understand that dam 
removal is an extreme action that will drive up energy costs and won't 
help recover fish.
    There are those who live outside the Pacific Northwest who fail to 
understand the important multiple functions these dams serve. In 
addition to providing most of the power for the region, these dams 
provide flood control, barge transportation of agriculture commodities, 
irrigation, recreation and ensure reliability of other renewable energy 
sources.
    In addition to protecting existing resources, we must also be 
looking at how we can create more hydropower through new water storage, 
canal-based hydropower and other measures. Everything to create more 
hydropower should be on the table. Efforts to eliminate this low-cost 
renewable energy, or to drive up its costs, will be resisted by this 
committee.
    To be clear, a true commitment to renewable energy requires a 
commitment to protecting existing hydropower dams and the many benefits 
they provide
    I'm committed to pursuing an ``all of the above'' energy approach 
for our nation. This is a top priority for the Natural Resources 
Committee. Hydropower is a key part of this strategy. We simply need 
more of this original, renewable energy. For that reason, I commend the 
Subcommittee Chairman for having this hearing and I look forward to 
working with him and others to pursue hydropower production legislation 
in the near future. It starts with today's hearing.
                                 ______
                                 
    Mr. McClintock. I now recognize Ms. Noem of South Dakota 
for her opening statement.

  STATEMENT OF HON. KRISTI NOEM, A REPRESENTATIVE IN CONGRESS 
                 FROM THE STATE OF SOUTH DAKOTA

    Ms. Noem. Thank you, Mr. Chairman. I am pleased to have the 
opportunity to introduce one of the witnesses today that is 
here from South Dakota, Mr. Vic Simmons. Vic graduated from 
South Dakota State University, and is the General Manager of 
Rushmore Electric Cooperative in Rapid City, South Dakota.
    He has been with Rushmore Electric for 12 years, and for 
over 30 years has also had experience with the Rural Electric 
Cooperative and the municipal electric system. His long history 
of electric utility experience throughout South Dakota gives 
him a unique perspective on providing hydropower to communities 
in South Dakota generated from the dams on the Missouri River. 
He has a wealth of knowledge on the impacts of the rising costs 
of regulations, such as compliance with Endangered Species Act 
requirements, so I want to thank Vic for coming today and for 
testifying before this Subcommittee. I look forward to hearing 
your testimony and working with you on deferral hydropower 
investments in the West. Thank you. I yield back.
    Mr. McClintock. Thank you. That concludes the opening 
statements. We will now hear from our panel of witnesses. Each 
witness's testimony will appear in full in the hearing record 
so I would ask that witnesses keep their oral statement to five 
minutes as outlined in our invitation letter and also as under 
Committee Rule 4[a].
    I would also like to explain how our timing lights work. 
When you begin to speak, our clerk will start the timer. The 
green light will appear. After four minutes, a yellow light 
will appear, and at that time you should begin to conclude your 
statement. At five minutes, the red light will come on. I would 
ask you to complete the statement, but then stop after that.
    And with that we will begin. Our first witness is Mr. Scott 
Corwin, the Executive Director of the Public Power Council of 
Portland, Oregon.

  STATEMENT OF SCOTT CORWIN, EXECUTIVE DIRECTOR, PUBLIC POWER 
                    COUNCIL, PORTLAND OREGON

    Mr. Corwin. Thank you, Mr. Chairman, Ms. Ranking Member, 
Members of the Subcommittee and greetings to Chairman Hastings 
as well from our region. I apologize for my voice this morning. 
I may have been yelling too much, which is an occupational 
hazard, but I will plow through here.
    Our members were granted preference rights to Federal power 
because these utilities are owned by their consumers, and they 
have a mandate to pass the benefits through to the citizens who 
are their owners. Several leaders of rural electric 
cooperatives from our region and around the country are here 
today. You have my full testimony as you said. I am just going 
to make four points.
    First, the Columbia River Power System, or FCRPS, is 
extraordinarily valuable and it is an investment worth 
protecting. It has 31 dams, total installed hydro capacity of 
22,000 megawatts. The system is coordinated with Canada, and 
there is a big decision approaching regarding whether it is in 
our interest to continue that treaty with Canada in its current 
form.
    The dams lend not only clean renewable power, they are 
critical to transportation, irrigation, flood control, and 
recreation as well. Barges on the Columbia River moves about 40 
million tons of goods each year. Four lower Snake Dams provide 
1,100 average megawatts of emission-free energy, enough to 
power the city the size of Seattle. They provide about 3,500 
megawatts of capacity, which is increasingly important. 
Replacing that power could cost about $5 million annually, and 
is likely to be from thermal resources, increasing carbon 
productions, and the rate impacts to citizens would be 
dramatic.
    Certainly breaching these dams as some advocate makes no 
sense from an energy perspective, but it also would not 
significantly improve access to history spawning areas, and is 
not needed for juvenile or certainly adult fish passage which 
is already about 96 percent at each project.
    The second point, the value has been degraded as operations 
of Federal dams are being increasingly constrained by 
environmental regulation. Notably, operational constraints on 
the FCRPS in the name of salmon mitigation, such as spilling 
water over the dams or adjusting timing of the flows in the 
river, have reduced the average generation of the system by 
about 1,100 average megawatts of energy, or about 13 percent 
since 1995.
    Over the past five years the average annual replacement 
cost of that energy has averaged $460 million, a cost borne by 
the customers. That is part of the total cost to BPA power 
customers of $800 million a year for fish and wildlife expenses 
which is about 30 percent of their entire wholesale power bill 
for these utilities. Customers will need a continuing role and 
review of the operations and budget obligations to continue to 
try to make sure ratepayer dollars are spent more efficiently.
    The first step to protecting this investment is to 
stabilize this regulatory impact by having the 2010 
supplemental biological opinion approved in court, and there is 
a hearing in Portland next week on that. With all Federal 
agencies, almost all of the tribes in the entire region, and 
the States of Washington, Idaho, and Montana solidly behind 
that plan, it is an opportunity to move forward as a region and 
build on the success we have seen so far in salmon mitigation.
    The third point, beyond fish and wildlife a new challenge 
for hydropower investment is the impact of integration of 
intermittent resources like wind into this system. PPC members 
support efforts to responsibly add cost-effect renewable 
resources, but there is an increasing limitation on the 
capacity to do so, and the wind variability presents 
operational challenges and tees up key questions about proper 
cost allocation so that hydro ratepayers are not unfairly 
paying the cost of this integration.
    One anomaly occurs from time to time during heavy spring 
runoff and there is too much generation for regional loads 
threatening reliability. All generators interconnected to BPA 
system, including wind generators, are asked to ramp down and 
receive Federal hydropower at low prices or even free. The 
agency now has a draft policy out with a whole list of actions 
they must take before requesting wind projects to fetter off, 
but the agency has said it will not pay generators for the 
value of lost production tax credits, which is a good result 
from the viewpoint of electricity ratepayers who pay for the 
system and cannot envision having to pay others to take Federal 
hydropower to cover a lost taxpayer-funded subsidy.
    That said, we see policy changes we would all work on 
together such as qualifying hydropower in that instance as 
eligible for those renewable energy or tax credits.
    My last point relates to recent budget proposals. Remember 
that all of the costs of this power system are paid by 
ratepayers, all of the costs. There is no Federal subsidy 
involved here. That is why we find so offensive any proposals 
to force power market administrations like BPA to charge higher 
rates to fund deficit reduction. It is nothing less than a 
unfair regional tax.
    Our economy is dependent upon this hydropower system, and 
we feel strongly this large investment is worth protecting so 
we thank you for holding this hearing, Mr. Chairman, and for 
the opportunity to speak with you today, and I look forward to 
any questions. Thank you.
    [The prepared statement of Mr. Corwin follows:]

 Statement of R. Scott Corwin, Executive Director, Public Power Council

Introduction
    Good afternoon, Chairman McClintock, Ranking Member Napolitano, and 
Members of the Subcommittee, and greetings to our Northwest 
Representatives on the Natural Resources Committee, Chairman Hastings, 
Representative DeFazio, Representative Labrador, and Representative 
Bishop. My name is Scott Corwin. I am the Executive Director of the 
Public Power Council. I thank you for the opportunity to testify today 
on this important topic, along with fellow Northwest panelists, Roman 
Gillen and Tom Karier.
    The Public Power Council (PPC) is a trade association representing 
the consumer-owned electric utilities of the Pacific Northwest with 
statutory first rights (known as ``preference'') to purchase power that 
is generated by the Federal Columbia River Power System and marketed by 
the Bonneville Power Administration (BPA). These preference rights were 
granted to publicly and cooperatively-owned utilities because they have 
a mandate to pass the benefits through to the citizens of the 
Northwest, the consumers who are their owners. Our member utilities 
have service territories in portions of seven western states and serve 
over 41% of the electricity consumers in the region. Several leaders of 
the rural electric cooperatives from our region are in the room today.
    These utilities, being both some of the largest and the smallest in 
the Northwest, are committed to preserving the value of the Columbia 
River system for clean, renewable hydropower and for the system's 
multiple other uses. Because the utility members of PPC are owned by 
and answer directly to their customers, they are very sensitive to the 
rates they pay for wholesale power and transmission of electricity.
    Today, I will talk about: (1) the value of these large ratepayer 
investments in federal hydropower in the West; (2) some of the 
regulatory constraints on the hydropower system, and the fish and 
wildlife mitigation effort; (3) new challenges to the system, including 
integration of variable resources such as wind power; and (4) some 
ideas about how to protect the investment now and in the future. For 
more on these issues, I welcome you to visit our website at 
www.ppcpdx.org or the website of Northwest RiverPartners at 
www.nwriverpartners.org for issues regarding salmon recovery.
The Investment in Federal Hydropower
    The Federal Columbia River Power System (FCRPS) is, by any measure, 
an incredible achievement in engineering, foresight, and political 
leadership that benefitted from the region's geographical and 
historical uniqueness. With respect to investments in the federal 
hydropower system, publicly and cooperatively owned utilities and their 
customers are the stakeholders who pay the costs, and have the most 
invested in seeing the system maintained to successfully meet all of 
its statutory obligations. Under long-term contracts, these utilities, 
commonly referred to as ``preference customers'' pay the costs 
attributed to power production in the FCRPS (power costs are about 80% 
of the total). Flood control, navigation, recreation, and irrigation 
are other important uses of the river system. On issues such as fish 
and wildlife mitigation, and specifically salmon recovery, the 
preference customers of BPA are committed to success as regional 
citizens who care for the resource and pay for this effort through 
their power rates.
    Hydropower has played, and will continue to play, an incredibly 
important role in our nation's energy policy. Nowhere is this more 
evident than in the Northwest. This is the original renewable source of 
power, and has been nothing less than the lifeblood of the Northwest 
region throughout modern history. And, even with this history of 
relatively low-cost power, the Northwest has made enormous strides as 
well in achievement of energy-efficiency.
    The dams lend not only a clean, continuing supply of power, they 
are critical to transportation, irrigation, flood control, and 
recreation as well. Barging on the Columbia River moves 40 million tons 
of goods each year and keeps hundreds of thousands of trucks and their 
associated emissions off of the road. The Columbia and Snake River 
Basin is the number one transportation gateway nationally for wheat, 
barley and several other commodities.
    To an area that was still largely without electricity in the early 
20th century, the dams brought light and then economic hope coming out 
of the Great Depression. Upon the foundations of the Reclamation Act in 
1902 and the Flood Control Act in 1917, investment in the system took a 
leap with the Bonneville Project Act in 1937. Construction on the 
larger projects, such as Bonneville and Grand Coulee Dam, began in 
1933. The oldest dam in the FCRPS is Minidoka, which began operating on 
the Snake River in 1909.
    In the Federal Columbia River Power System there are now 31 dams 
run by the Bureau of Reclamation and the Army Corps of Engineers, 
ranging from a three megawatt diversion dam in Boise, Idaho, to the 
6795 megawatt (MW) Grand Coulee Dam in Washington. Total installed 
hydropower capacity in the federal system is over 22,000 MW. This 
system is coordinated with Canada's portion of the river system, and it 
should be noted that an important decision is approaching regarding 
whether it is in our interests to continue the current treaty with 
Canada.
    Part of the ``protection of investment'' challenge is to maintain 
the system we have. Over the next few years, total annual operations 
and maintenance costs to ratepayers for the FCRPS hydro program are 
expected to increase from about $280 million annually, to almost $350 
million per year, not including capital. Fish and wildlife mitigation 
costs are about $800 million per year, about one-third of the total 
power revenue requirement in BPA rates.
    Of particular note in value and importance to the region are the 
four lower Snake Dams, completed in the 1970s. They provide about 1,100 
average megawatts of renewable, emission-free energy which is 
approximately the amount of energy necessary to power the city of 
Seattle. Replacing that power could cost $300-$500 million annually, 
and is likely to be from thermal sources (a notable consideration for 
West Coast states looking at aggressive carbon reduction goals). A 
study by the Northwest Power and Conservation Council shows that 
removal of these dams would increase green house gasses by 4.4 million 
tons/yr in the Northwest and 5.2 million tons/yr west-wide, nearly the 
equivalent of two typical 400 MW coal-fired power plants. This would 
occur because the baseline scenario, without dam removal, already 
assumes that the region will pursue all cost-effective energy 
conservation and meet state renewable portfolio standards.
    In addition, these lower Snake River dams provide other key 
economic benefits such as irrigation and transportation. Over 10 
million tons of commercial cargo travels this stretch of river to 
Lewiston, Idaho.
    Finally, in contrast to some accounts, removal of the lower Snake 
Dams would not provide much if any benefit to fish listed under the 
Endangered Species Act (ESA). Current juvenile fish passage survival 
rates are at or above 95% at all four dams according to NOAA fisheries. 
In any case, these dams only affect 4 out of 13 Endangered Species Act 
listed salmon and steelhead stocks in the Columbia River Basin. And, 
these four dams inundated only 10% of the historic fall chinook 
spawning habitat in the Snake River; spring chinook, sockeye and 
steelhead were even less affected.
    So, removal of these dams would not significantly improve access to 
historic spawning areas, is not needed for fish passage, and would make 
no sense from an energy portfolio perspective.
Regulatory Constraints on Federal Hydropower
    In the Northwest, we are ever cognizant of the impact of the 
federal hydropower system on the environment. An enormous portion of 
the investment in the system has been committed in order to address 
those concerns. This investment has been not only in financial form, 
but also in the form of time dedicated by thousands of individuals from 
state and local agencies, tribal agencies, federal agencies, and the 
private citizenry.
    For electricity ratepayers this investment is not only reflected in 
the current $800 million of annual expenditures mentioned earlier, but 
in the cumulative impact of over $13 billion in costs over the past 
three decades for fish and wildlife efforts funded through BPA power 
rates. Most of these costs arise from implementation of the Endangered 
Species Act (ESA) and the Pacific Northwest Power Planning and 
Conservation Act. However, from a preference customer viewpoint, it 
appears that electricity ratepayers are asked to fund endeavors far 
beyond the actual impacts of the hydropower system because BPA has been 
the easiest funding source to tap. It is appropriate to remember that 
salmon have lifecycles covering thousands of miles in which mortality 
occurs well before and after their travel through the ratepayer-funded 
hydropower system.
    The 2010 supplemental biological opinion currently before the U.S. 
District Court is an evolution of at least 18 years of work by dozens 
of state, tribal and federal agencies, and is a regionally created, 
scientifically sound path to success. We are hopeful that the 
comprehensive approach and broad support for this latest biological 
opinion will lead to court approval and full implementation.
    Several different biological opinions under the ESA have guided 
regional efforts since the first listings of salmonids in the early 
1990s. Eventually, these documents recognized what the science showed: 
hydropower operations alone would not recover the species. Many other 
factors contributed to the salmon's decline including over harvest, 
hatchery practices, degraded habitat and ocean conditions.
    Now, the massive effort seems to be paying off: fish passage 
through the projects has been good and is improving all the time. Adult 
passage using ladders has been excellent for many years. And, new 
technology is seeing juvenile fish passage downstream at very high 
rates. In fact, the new biological opinion sets very high, but 
achievable, targets for juvenile passage at each dam of 96% in the 
spring and 93% in the summer. Last year saw 648,000 fall chinook 
return, and strong projections for 2011 could show record numbers for 
chinook, coho, and sockeye in the Columbia and Snake rivers.
    The investments put forth by ratepayers spread to many areas of the 
federal hydropower system, including:
          Improvements to the fish passage structures at the 
        eight federal dams on the Snake and Columbia Rivers;
          Screens in front of the turbines to keep juvenile 
        fish from entering the turbines;
          New design of the turbine blades and housing to 
        minimize injury to fish;
          Juvenile bypass systems to collect juvenile fish and 
        route them around the dams;
          New ``fish slides'', or spillway weirs, that pass 
        fish safely over the dams;
          Flow deflectors at spill bays to improve water 
        quality during spill; and,
          Many improvements to fish and wildlife habitat and 
        hatcheries.
    As we look to protect these investments in fish mitigation, 
predation is a significant factor on salmon and steelhead mortality and 
needs more attention as part of a comprehensive plan. A classic 
``conflict of laws'' problem between the ESA, the Migratory Bird Treaty 
Act, and the Marine Mammal Protection Act has left bird predators 
consuming between 4% and 21% of the juvenile salmonids migrating down 
river each year, and sea lions consuming an estimated 4% or more of the 
adult spring chinook population passing the Bonneville Dam each year. 
They also consume large numbers of sturgeon and lamprey. This figure 
does not include salmon and steelhead taken by sea lions from the 
estuary up to Bonneville Dam.
    Despite these non-hydro impacts, juvenile in-river survival today 
is nearly twice as high as it was in the mid-to-late 1970's. Adult 
survival through the dams and reservoirs is similar to that observed in 
natural rivers. Again, hydropower is only one of many factors impacting 
species. Any approach to salmon recovery that will be successful long-
term must take into account all aspects of the salmon lifecycle 
including impacts from hydro, hatcheries, harvest, and habitat.
    But, it is the mandated constraints on federal hydropower 
operations that have been most striking in both in their cost and their 
operational impact on the system. Operational constraints on the FCRPS, 
such as spilling water over the dams or adjusting the timing of flows 
in the river, have reduced the average generation of the system by 
about 1100 average megawatts of energy, or about 13%, since 1995. Over 
the past five years, the average annual replacement cost of that energy 
is $460 million, borne by the customers.
    Water is spilled over the federal dams in the lower Snake and main-
stem Columbia River to purportedly improve survival of juvenile fish 
passing these dams. The current spill program starts in early April 
each year and concludes at the end of August. The program is balanced 
with optimizing safe juvenile fish passage using fish transportation 
programs which often provide the highest fish survival benefit, 
especially in low water years.
    The 2010 biological opinion allows the potential for modification 
of the spill program and other river and dam operations to optimize 
fish survival for both adult and juvenile fish. Research indicates that 
at times, transporting by barge is the safest route of passage for 
juvenile fish, especially late in the summer and during low water 
years. The current court injunction mandates specific spill schedules 
and dam operations which do not provide the flexibility to improve 
operations of the federal hydrosystem to maximize fish passage 
survival.
    The spill and flow regimes causing a decrease in federal hydropower 
generation, and the extra associated costs, have occurred at the same 
time that load growth and other demands for that power have increased 
in the region. As noted in the Northwest Power and Conservation 
Council's Sixth Power Plan, this will push the region to add more 
thermal, carbon-emitting generation as gas-fired generation is the most 
likely available source to meet base-load power needs.
New Challenges for the Hydropower Investment: Intermittent Resources
    As noted above, a challenge for hydropower in the near future comes 
from the combination of increasing demand for electricity at the same 
time that this resource has experienced increased regulatory 
limitations on generation.
    The reliability and flexibility of hydropower generation make the 
FCRPS particularly well-suited to integrating other renewable sources 
of energy, such as wind, that are much more intermittent. But, there is 
a limit to the available capacity and flexibility of the system, and 
therefore a limit to the demands that can be placed on the system 
regardless of whether those demands are created by fish and wildlife, 
wind and other intermittent resource integration, or simply following 
the swings in customers' loads placed on the system.
    PPC members support efforts to responsibly add cost-effective 
renewable resources to the region's electric generation resource mix. 
But, effectively integrating intermittent renewable resources poses a 
number of challenges that must be properly addressed to ensure 
effective operations, system reliability and cost allocation.
    Further complicating this dynamic is the dramatic pace of wind 
development in the Northwest even as the region scurries to catch up to 
the technological and operational challenges posed by wind power's 
unique characteristics. As recently as 2005, the system operated by BPA 
integrated only 250 MW of wind generation. That amount doubled in 2006, 
then doubled again in 2007. Today, there is over 3500 MW of wind being 
integrated into the BPA transmission and power system. This represents 
a 1400 percent increase in just six years.
    BPA and the region should be acknowledged for this massive effort 
to integrate such a large volume of renewable energy so quickly. And, 
preference customers have been directly involved with the development 
and purchase of some of those projects. But, wind generation in the 
Northwest is mostly localized in one portion of the region. This 
creates a dynamic where variability of total output can range very 
suddenly from almost full regional capacity to almost none.
    Forecasts showing that wind capacity might double again in the next 
few years raise numerous concerns and questions about the operational 
impacts to the system: Can an increasingly congested transmission 
system handle this influx? Can a constrained hydro system be relied on 
to provide reserves to balance the variability? As those reserves are 
provided, or as additional sources of capacity and new transmission are 
added, who will fund these initiatives, and will proper principles of 
cost causation be followed? There is a fundamental rate-making 
principle that there should not be costs shifted to those who do not 
cause the cost or who do not benefit from the expenditure.
    Over-generation: Too Much of a Good Thing? As we look at this 
year's estimate of high water run-off in the Columbia River system, 
which is currently 119 percent of average, it raises the specter of 
another serious challenge that occurs when the region experiences an 
oversupply of generation during surging spring runoff, as it did in 
June 2010. Water moving through the Columbia and Snake Rivers must pass 
through generators in order to avoid excessive spill that can harm 
endangered and threatened fish and violate Clean Water Act requirements 
that prevent over-saturation of gas in the water column. The challenge 
is further exacerbated when it occurs during periods of low electrical 
demand, since there must be a load to use the electricity that is 
generated at the dams in order to keep the system in balance.
    In these instances water must run through generators instead of 
spilled in order to ensure the hydropower operations necessary to meet 
fish protection requirements (avoiding high gas saturation). The extra 
power is sold at low prices, or even given for free, to utilities that 
reduce generation from their own projects and use federal power instead 
to make their deliveries (this is known as ``environmental 
redispatch''). Thermal generation projects have historically taken 
advantage of these sales to displace their own generation with lower-
cost hydropower. During the high water oversupply event in June 2010, 
thermal generation was largely shut down or reduced by purchases of 
energy from BPA.
    However, because of differing economic incentives, such as the need 
to generate electricity in order to receive renewable energy credits 
(RECs) or tax credits, wind generators in the region did not similarly 
shutdown during the high water event last June. This resulted in the 
threat of harmful levels of spill in order for the system to avoid the 
extreme consequences of over-generating.
    BPA has developed a Record of Decision to describe how they will 
handle this type of event entering the spring run-off season this year. 
PPC believes the policy is a solid approach that meets the obligations 
of the federal system, reflects prudent business practice, helps 
protect the investment in the system, and meets legal requirements 
designed to protect fish.
    In line with BPA's proposed policy, PPC believes: (1) BPA should 
use all other reasonable means to dispose of excess federal generation 
during a high water event before providing federal hydropower at no 
cost to displace renewable generators within the BPA Balancing 
Authority; (2) BPA should adhere to clear and transparent steps it will 
take to reduce spill during high runoff conditions with specific 
triggers for environmental redispatch; (3) BPA should not pay an entity 
to take federal hydropower in order to replace a lost taxpayer subsidy 
or renewable energy credit. Also; and, (4) BPA, its customers, and the 
other stakeholders should seek other policy changes to provide 
compensation for the revenues associated with federal and state 
renewable energy rules. For instance, hydropower delivered under 
environmental redispatch conditions should be classified as 
``renewable'' to meet the REC or tax credit requirements so that wind 
generators still receive the associated revenues they expect.
Conclusion: Protecting the Investment
    In light of its significant benefits to customers and to the 
environment as a clean, renewable, and flexible form of generation, 
hydropower should be preserved, encouraged, and enhanced where 
possible. Over the last 75 years of major federal hydropower production 
in the Pacific Northwest, citizens of our region and neighboring 
regions have benefited from this resource and its clean energy, low 
impact transportation, irrigation, flood control, and recreation.
    The first and best step to protecting this investment is to 
stabilize the regulatory burden upon it. The 2010 supplemental 
biological opinion for operation of the FCRPS for salmonids is the 
result of massive work to create science-based consensus among states, 
tribes, and federal agencies. It should be approved and allowed to 
work.
    While the biological opinion and associated memoranda of agreement 
represent ominous costs to preference customers, we also see the need 
to get the plan approved in order to create some regulatory stability. 
This is an opportunity to move forward as a region and build on the 
success we've seen so far in salmon mitigation. Meanwhile, better 
approaches to predation, better policies around harvest and hatchery 
practices, and more efficient use of water through the system are areas 
customers will watch closely.
    Another way to protect the investment in all areas of the FCRPS is 
to work hard to make sure future investments are sensible and are the 
best possible use of limited ratepayer dollars. Our goal is to have 
significant input at the front end of the BPA, Army Corps of Engineers, 
and Bureau of Reclamation budget processes for the Federal Columbia 
River Power System. As customers, we do not want merely to be arguing 
in rate cases over the allocation of costs already incurred. Currently, 
an evolution of the budget process for BPA called the Integrated 
Business Review is further refining how and when customers get 
information. But, an enhanced customer role in key spending decisions 
still is needed, especially as additional wildlife funding commitments 
are considered. We look forward to working closely as well with the 
Northwest Power and Conservation Council in that pursuit.
    One other way to protect the investment is to protect the investors 
from unintended consequences. BPA should conduct a new assessment of 
the impact of the influx of wind generation, and of potential impacts 
in light of forecasts for future development. The Northwest Wind 
Integration Forum, with an array of regional stakeholders, is one venue 
where this could take place. Preference customers are looking to BPA to 
adhere to the principles of cost causation as it incurs direct and 
indirect costs from this challenge. But, we are ready to work 
collectively towards long-term solutions.
    And, one final way to protect those expected to make investments in 
the federal hydropower system is to oppose any proposals to hijack the 
value of that investment by raising the rates of Power Marketing 
Administrations in the name of federal deficit reduction. Preference 
customers pay for the costs of operations and maintenance of the 
system, and they pay the principle plus interest of any Treasury debt 
annually (the payment to Treasury last year was $864 million). 
Proposals to raise the rates of Power Marketing Administrations for 
deficit reduction are a misguided attempt to create a new regional tax 
to fund the federal government.
    At a critical time in our nation's history with respect to energy 
policy, the federal hydropower system will play a lead role as a key 
domestic source of adequate, efficient, reliable, and renewable energy. 
Our large investment in the system certainly is worth protecting. Thank 
you for holding this hearing, and for the opportunity to speak with you 
today. I look forward to addressing any questions you may have.
                                 ______
                                 
    Mr. McClintock. Thank you very much for your testimony. Our 
next witness is Mr. Chris Morgan, President of the Colorado 
Rural Electric Association and a Board Member of Gunnison 
County Electric Association of Gunnison, Colorado.

  STATEMENT OF CHRIS MORGAN, COLORADO REA PRESIDENT AND BOARD 
   MEMBER OF GUNNISON COUNTY ELECTRIC ASSOCIATION, GUNNISON, 
                            COLORADO

    Mr. Morgan. Mr. Chairman, Ranking Member and the rest of 
the Committee, thank you for allowing me to come and speak to 
you today.
    I am here today to discuss the importance of Federal 
hydropower, a reliable renewable resource, and keeping the 
rates of Colorado's 1.25 million electric cooperative member-
owners affordable. Specifically, I will confine my testimony to 
the Aspinall Unit.
    The Aspinall Unit consists of three dams--Blue Mesa, Morrow 
Point and Crystal Dams on the Gunnison River, and the Aspinall 
Unit provides a number of benefits to the folks in the western 
United States. It provides flood control, water storage for 
municipal use and for irrigation, and it provides hydropower 
generation. That hydropower generation is very cheap. In fact, 
hydropower generation is the cheapest source of electricity 
available to Gunnison County Electric Association and the other 
cooperatives in the area.
    The Aspinall Unit also has another critical feature. It 
provides nearly half of the power peaking flexibility of the 
Colorado River Storage Project. In addition, the energy 
produced at the Aspinall Unit is renewable and emissions free. 
As you know, Colorado has an active renewable portfolio 
standard and has goals of being a leader in producing clean 
energy. The Federal Government has set similar goals and is 
currently contemplating an RPS for the nation. The Aspinall 
Unit has been meeting those goals for many, many years already.
    The Aspinall Unit also provides benefits to the West. It 
provides recreational opportunities such as boating, fishing, 
sailing, and river running. They provide water flows to help 
protect endangered species, and the creation of a substantial 
fishery.
    Mr. Chairman, currently we have a reasonable balance in the 
Aspinall Unit. After seven years of Federal litigation and a 
mediated settlement, the Black Canyon Consent Decree was signed 
on December 31, 2008. The drafting of the consent degree 
involved approximately 30 parties including the relevant 
Federal agencies, Reclamation, National Park Service and 
Western Area Power Administration, also the State of Colorado, 
environmental interests and recreational enthusiasts, and 
Federal hydropower customers. So as you can see there has 
already been struck a balance between environmental interests 
and hydropower.
    The Bureau of Reclamation should be given the power of 
discretion to operate the Aspinall Unit to meet a wide variety 
of important needs from power generation to recreation to 
environmental concerns, and I understand there are proposals to 
restrict power generating operations at the Aspinall Unit which 
would have a direct impact on the ability of the Western Power 
Administration to deliver power to its customers, ultimately 
leading to increased rates.
    As you know, Colorado has been hit hard by the recent 
recession. My constituents and cooperative members have lost 
jobs and some have even lost their homes. The people of 
Colorado are already experiencing significant increases in the 
cost of electric generation due to many factors: increased 
construction costs of generation and transmission facilities, 
increased costs of siting, increased cost of additional 
regulations, and increased costs associated with rising fuel 
costs.
    The people of Gunnison County and Colorado cannot tolerate 
anymore rate increase, and since electric cooperatives are 
nonprofit utilities every additional dollar that is passed down 
goes directly to the consumer.
    Mr. Chairman, in closing, I would like to assert that I am 
not only advocating solely for the electric utility industry. 
This is because why? I am an environmentalist as well and a 
nature lover. While I am not a scientist, I am an avid boater. 
I have had the opportunity to run the Grand Canyon in a kayak 
four times. I have spent over 60 nights down at the bottom of 
the Grand Canyon. I have had opportunities to kayak the Black 
Canyon on the Gunnison which the Aspinall Unit resides upon. I 
have seen that there is a balance. I go to these places because 
they are beautiful and they are wonderful places to go visit, 
and I also understand at the same time that we need clean, 
reliable, affordable, low-cost dispatchable electric 
generation, and that we cannot afford to lose any of our dams. 
We cannot afford to pass more costs onto our consumers.
    So, I would assert that we currently have a balance and we 
should maintain the status quo that we have today. Thank you 
very much, sir.
    [The prepared statement of Mr. Morgan follows:]

              Statement of Chris Morgan, Board President, 
                  Colorado Rural Electric Association

    Chairman McClintock and Ranking Member Napolitano, my name is Chris 
Morgan. I am currently a board member of Gunnison County Electric 
Association (GCEA) in Gunnison County, Colorado and I am also currently 
serving as the Board President of the Colorado Rural Electric 
Association (CREA). GCEA's service boundaries encompass portions of 
Gunnison, Hinsdale and Saguache counties in Colorado, and it serves 
over 10,000 customers on 1,030 miles of distribution lines. CREA is the 
state association representing the 1.25 million Coloradans spread 
across 70% of the state's landmass who depend on an electric 
cooperative for their electricity.
    I am here today to discuss the importance of the Federal 
Hydropower--a reliable renewable resource- in keeping the rates of 
Colorado's 1.25 million electric cooperative member-owners affordable. 
Specifically, I will confine my testimony to the importance of the 
Colorado River Storage Project (CRSP) and the integral role that the 
Bureau of Reclamation's Aspinall Unit--the facilities of which are in 
Gunnison County's backyard--plays in providing reliable renewable 
generation during peak times of electric power consumption in the West.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    GCEA purchases power under a contract with Tri-State Generation 
and Transmission. GCEA's average wholesale cost of power year for year 
to date 2011 is $69.24 per MWh. That translates into a wholesale cost 
of nearly 7 cents a KWh. As you can see from the graph to the right, 
Hydroelectric power represents the cheapest portion of the portfolio of 
the electricity that GCEA purchases at a wholesale rate of less than 
half of the cost of the blended cost the energy we purchase. In 
addition, while I do not represent nor is GCEA associated with the 
power consumed by the municipal utility of the City of Gunnison, the 
City of Gunnison also enjoys rate relief from the hydropower produced 
by the Aspinall Unit.
    The Aspinall Unit consists of three dams and reservoirs on the 
Gunnison River in Colorado: Blue Mesa, Crystal, and Morrow Point. The 
Aspinall Unit is one of the components of the federal multi-purpose 
Colorado River Storage Project that is operated by the Bureau of 
Reclamation. CRSP power resources are marketed, under long-term 
contract, pursuant to federal law, to non-profit entities such as 
electric cooperative and municipal utilities in the States of Colorado, 
New Mexico, Wyoming, Utah, Nevada and Arizona. The Glen Canyon Dam in 
Arizona is the largest generating feature of the CRSP. However, due to 
environmentally imposed restricted operations at Glen Canyon in Arizona 
and the Flaming Gorge Dam in Utah, the Aspinall Unit in Colorado 
currently provides nearly half of the peaking flexibility in the 
overall CRSP. In other words, the Aspinall Unit is like a light switch 
in your house--you can turn it on during peak times of electricity 
usage and turn it off when electricity demand decreases.
    There are proposals to restrict power-generating operations at the 
Aspinall Unit, which would have a direct impact on the ability of the 
Western Area Power Administration (``WAPA'') to deliver power to its 
customers--ultimately leading to increased rates. (WAPA delivers the 
hydropower generation to Tri-State Generation and Transmission 
Association, a power supply co-op headquartered in Colorado, which in 
turn provides the power to GCEA).
    As the economy struggles to make its way out of the ``Great 
Recession''--Colorado's electric cooperative consumers cannot afford 
increased electricity rates.
    In order to understand the importance of the Aspinall Unit, it is 
important to know the history of Federal power generation in the Upper 
Colorado River Basin. The Colorado River Basin resources are split 
between the needs of the Upper (Colorado, Wyoming, Utah and New Mexico) 
and Lower (Utah, Arizona and California) Basin states as codified in 
the Colorado River Basin Compact of 1922. The compact calls for the 
Upper Basin states not to deplete the flow of the Colorado below 75 
million acre feet during any period of 10 consecutive years. During the 
post World War II boom years the population density of the U.S. began 
to shift to the West and Southwest increasing demand on the resources 
of the Colorado River Basin. In a bid to sustain economic development 
in the Upper Basin and prevent the catastrophic consequences to the 
Upper Basin states of a Lower Basin Compact ``call,'' Congress passed 
and President Eisenhower signed into law the Colorado River Storage 
Project Act of 1956.
    The CRSP Act authorized the construction of the Glen Canyon, 
Aspinall, Flaming Gorge and Navajo facilities. This Act had three 
purposes: ``the reclamation [irrigation] of arid and semiarid land, 
control of floods, and for the generation of hydroelectric power. . .'' 
The CRSP Act excluded fish, wildlife and recreation from its purposes.
    About a decade after President Eisenhower signed the CRSP Act into 
law, further population shifts to the Southwest prompted Congress to 
pass the Colorado River Basin Project Act (CRBPA). The1968 Act included 
language stating that ``. . .improving conditions for fish and 
wildlife'' was a purpose of the Act, but it also explicitly states that 
``Nothing in this chapter [act] shall be construed to alter, amend, 
repeal, modify, or be in conflict with the provisions of. . .the 
Colorado River Storage Project Act.'' In other words, the language 
included in the 1968 law for fish and wildlife does not, in any way, 
change the original purposes of the 1956 law which were to promote 
irrigation, flood control and hydropower generation.
    Unfortunately, questions still arise regarding the authorized 
purposes of facilities constructed under the authority of both laws. 
Those questions over the last 10 years have created the following 
debate: should the Aspinall Unit be operated primarily to meet the flow 
requirements of two endangered species of fish, the Razorback Sucker 
and Bonytail Chub OR should Reclamation have the discretion to operate 
Aspinall to meet its statutory obligations and authorized purposes 
while at the same time benefitting the additional resource needs of 
fish, wildlife and recreation? I would argue that Reclamation should 
operate the three dams on the Gunnison to meet both power generation 
needs and to protect endangered species.
    Nearly 10 years ago, the National Park Service asked for a reserved 
water right in the Black Canyon of the Gunnison, which is immediately 
downstream from the Aspinall Unit. In the meantime, Reclamation began 
work on an environmental impact statement (EIS) process which was 
intended to provide for operational changes at Aspinall to help meet 
flow recommendations thought to be necessary for the endangered fish 
species. After several years of negotiation with multiple federal 
agencies and stakeholders, a consensus draft EIS was prepared. The 
draft was put ``on hold'' until the Black Canyon water right issues 
were settled.
    After seven years of federal litigation and a mediated settlement, 
the Black Canyon Consent Decree was signed on December 31, 2008. The 
drafting of the consent decree involved approximately 30 parties, 
including the relevant federal agencies (Reclamation, National Park 
Service, and Western Area Power Administration), the State of Colorado, 
environmental interests, recreational enthusiasts and federal 
hydropower customers. The decree was intended to ``split the baby'' by 
allowing for the Aspinall Unit to be operated for two concurrent 
purposes--a Spring Peak flow release to meet flow recommendations which 
should assist in the recovery of endangered species while at the same 
time providing a peak for the National Park Service resources in the 
Black Canyon of the Gunnison National Park..
    In late December, 2010, after nearly two years of being ``on 
hold'', the draft EIS was reissued to the cooperating agencies. It was 
significantly revised by the Department of the Interior in Washington, 
D.C. with no consultation among the stakeholders that had worked 
diligently for several years during the drafting process. Several 
aspects of the revised EIS appear to elevate Park resources above the 
originally authorized Project purposes, and could have significant 
impact on the flexibility and timing of hydropower generation.
    Cooperating agencies submitted comments on April 1, but as of this 
time, it is uncertain as to what the next steps will be. The State of 
Colorado, the Platte River Power Authority and the Western Area Power 
Administration all submitted detailed comments recommending that those 
consensus provisions contained in the draft be reinstituted in the 
revised EIS and that the careful balancing of resource purposes and 
benefits that was sought by those involved in the drafting be 
reinstated. This ``balance'' is critical when federal multi-purpose 
projects are operated. As noted in a recent District Court decision, 
Judge David Campbell, in ruling for the United States, highlighted the 
importance of ``balance''. Although he was referring to the operation 
of Glen Canyon Dam, I believe that his ruling is equally applicable to 
Reclamation's operation of the Aspinall Unit because the projects of 
the CRSP are inextricably linked. ``This experience aptly illustrates 
the complex set of interests Reclamation must balance in operating the 
Dam. Those interests include not only the endangered species below the 
Dam, but also tribes in the region, the seven Colorado River basin 
states, large municipalities that depend on water and power from Glen 
Canyon Dam, agricultural interests, Grand Canyon National Park, and 
national energy needs at a time when clean energy production is 
becoming increasingly important.'' \1\
---------------------------------------------------------------------------
    \1\ Grand Canyon Trust v. United States, No. CV-07-8164-PHX-DGC, 
Order of March 29, 2011
---------------------------------------------------------------------------
    In addition, Mr. Chairman, GCEA has sought the evaluation of the 
possibility of pursuing the addition of a hydroelectric generation 
facility to an existing BOR dam within our service territory. The 
specific storage facility is known as Taylor Park Reservoir Dam. We 
have conducted a feasibility study of the possibility of adding a 
hydroelectric generator to that existing dam alongside two other 
partners--The Upper Gunnison River Conservation District and the 
Uncompahgre Water Users Association. The results of this study 
concluded that there were two feasible options for electric generation 
from this facility, shown below. These conclusions are based upon 
historic hydrological conditions, existing and possible electric 
distribution line capacity, power generation potential and a 
comprehensive economic analysis. The two preliminary recommendations 
provided by the URS Corporation are briefly outlined below.
          1.960 MW hydropower plant. This would be possible 
        under the current single phase transmission capabilities 
        existing in the Taylor River Canyon currently.
          3.675 MW hydropower plant. This option would require 
        a complete rebuild of the transmission facilities from Taylor 
        Reservoir in order to place the energy on the grid.
    This power would be available from an existing water storage 
facility. In addition, the power would be emissions-free and 
potentially be dispatchable in order to help mitigate peak demands of 
electric energy. As you are aware, mitigation of peak demand periods 
eliminate or delay the need to build new generation resources, reduce 
emissions and reduce costs to the consumer.
    However, GCEA is very concerned that as we are a very small not for 
profit utility with limited revenues. The financial risks associated 
with the navigation of the governmental regulatory process in pursuing 
this project may be a hurdle we cannot overcome. A small utility such 
as GCEA needs regulatory certainty or we cannot pursue a project, and 
GCEA has observed historically that regulatory certainty is not 
something we can count on. In order for a small utility such as GCEA to 
help coordinate the use of an existing government owned water storage 
facility for the production of reliable, emission free and reliable 
electric energy, we need your help.
    In closing, Mr. Chairman, I think Judge Campbell's decision is 
correct and speaks to the title of this hearing. If we are moving 
toward a cleaner and greener energy future, there must be a recognition 
of the fact that hydropower is the cheapest, and most abundant 
renewable energy resource. In my view, protecting Federal Hydropower 
Investments in the West means primarily utilizing Aspinall and other 
CRSP facilities for one of the purposes for which they were originally 
intended--the generation of clean, renewable and affordable hydropower.
    Thank you, Mr. Chairman, I'd be happy to answer any questions you 
or members of the committee might have.
                                 ______
                                 
    Mr. McClintock. Great. Thank you for your testimony. Our 
next witness who has already been introduced, Mr. Vic Simmons, 
General Manager of Rushmore Electric Cooperative in Rapid City, 
South Dakota.

  STATEMENT OF VIC SIMMONS, GENERAL MANGER, RUSHMORE ELECTRIC 
             COOPERATIVE, RAPID CITY, SOUTH DAKOTA

    Mr. Simmons. Thank you, Mr. Chairman, Members of the 
Committee.
    As introduced, I am Vic Simmons. I am General Manager of 
Rushmore Electric Power Cooperative. Rushmore Electric is a GNT 
in western South Dakota. Our hydropower comes from the Bureau 
of Reclamation and Corps of Engineers dams on the Missouri 
River and its tributaries.
    Rushmore's allocations along with allocations to five 
Native American tribes in western South Dakota make up about 
one-fourth of our power supply resources. I also serve as 
Chairman of the Water and Power Planning Committee of the 
Midwest Electric Consumers Association. Midwest is a regional 
coalition of over 300 consumer-owned utilities serving over 3 
million consumers through nine western states.
    Rushmore Electric strongly supports the funding necessary 
to keep the Federal hydropower resources operating as a vital 
part of our power supply. Without dependable funding in the 
Federal budget the reliability of this system will suffer. 
Replacing this renewable hydropower with other resources would 
cost the consumers of western South Dakota over $2.7 million 
per year. This extra burden is not affordable in an area that 
continually ranks among the lowest income areas in the United 
States. This is an area where we often measure the number of 
miles of line it takes to serve a customer, not the other way 
around.
    The continuing rising cost of regulations, compliance with 
Endangered Species Act requirements, and rules that seem to 
lack common sense take up valuable time and resources. As an 
example, the spring rise scenario to encourage pallid sturgeon 
to spawn would release water when electric loads are at their 
lowest, thus wasting that stored water. If that water is not 
there in the summer when we need it most for peaking 
conditions, it would have to be replaced with natural gas-fired 
generation at a higher cost and a higher environmental issue.
    Like most of the infrastructure in this country, a safe and 
reliable Federal hydropower system needs adequate and 
dependable funding for capital improvements, operations and 
maintenance. These facilities were built over 45 years ago. 
While the Bureau of Reclamation and the Corps of Engineers have 
done a remarkable job of keeping these facilities in top 
condition, as they get older these facilities need more funds, 
not less.
    As Federal hydropower consumers, as my friend and colleague 
stated, we pay 100 percent of the costs. We pay that back with 
interest. We also cover our share of the dams and the 
reservoirs, and we pay a share of irrigation. So far as of the 
end of 2009 $1.2 billion of the $2.8 billion Federal financed 
power facilities have been paid back with interest.
    Protecting the Federal hydropower investment in the West is 
not only about providing hydropower, flood control, municipal 
and industrial water supply, irrigation, recreation, 
navigation, fish and wildlife, it is also a sound business 
decision for the United States. The Corps of Engineers is 
determined that the Missouri River Dams have prevented over 25 
billion in flood damage since 1938, thus repaying the original 
investment in the dams billions of times over. The Federal 
hydro system has returned the investment of the past and will 
continue to return the investments of the future. Thank you.
    [The prepared statement of Mr. Simmons follows:]

              Statement of Vic Simmons, General Manager, 
                  Rushmore Electric Power Cooperative

    Mr. Chairman and members of the subcommittee, thank you for the 
opportunity to testify before you today on protecting federal 
hydropower investment in the west.
    My name is Vic Simmons. I am the General Manager of Rushmore 
Electric Power Cooperative. Rushmore Electric is a Generation and 
Transmission cooperative serving western South Dakota. Our hydro power 
comes from the Bureau of Reclamation and Corps of Engineers dams on the 
Missouri River and its tributaries through allocations from the Western 
Area Power Administration. Rushmore Electric's allocation along with 
allocations to five Native American Tribes located within our western 
South Dakota service territory make up just short of one-fourth of our 
power supply resources.
    I also serve as the Chairman of the Water and Power Planning 
Committee of the Mid-West Electric Consumers Association. The Mid-West 
Electric Consumers Association is a regional coalition of over 300 
consumer-owned utilities (rural electric cooperatives, public power 
districts, and municipal electric utilities) serving over 3 million 
consumers through purchases of hydropower generated at federal multi-
purpose projects in the Missouri River basin under the Pick-Sloan 
Missouri Basin Program. The nine states included within the Mid-West 
footprint are Colorado, Iowa, Kansas, Minnesota, Montana, Nebraska, 
North Dakota, South Dakota and Wyoming. Midwest and its members enjoy 
an excellent working relationship with our federal partners.
    Rushmore Electric strongly supports the funding necessary to keep 
the federal hydropower resources operating as a vital part of our power 
supply. Without dependable funding in the federal budget, the 
reliability of this system will suffer. Replacing this renewable 
hydropower with other resources would cost the consumers of western 
South Dakota over $2.7 million dollars per year. This extra burden is 
not affordable in an area that continually ranks among the lowest 
income areas in the United States. This is an area where we often 
measure the number of miles of line it takes to serve a customer, 
rather than the number of customers per mile of line.
    The continually rising costs of regulations, compliance with the 
Endangered Species Act requirements, and rules that seem to lack common 
sense take up valuable time and resources. As an example, the spring 
rise scenario to encourage the pallid sturgeon to spawn, would release 
water when electrical loads are at their lowest, thus wasting the 
stored water. If that water is not there when it is needed for peak 
conditions later in the summer, expensive natural gas fired turbines 
would need to be used.
    Like most of the infrastructure in this country, a safe and 
reliable federal hydropower system needs adequate and dependable 
funding for capital improvements, operations, and maintenance. These 
facilities were built over 45 years ago. While the Bureau of 
Reclamation and the Corps of Engineers has done a remarkable job of 
keeping these facilities in top condition, as they get older, these 
facilities will take more funds to maintain and update, not less.
    Federal hydropower facilities are part of the multi-purpose 
projects that serve a variety of purposes--flood control, municipal and 
industrial water supply, irrigation, recreation, navigation, fish and 
wildlife. Unlike most other federal capital projects, much of the costs 
of constructing, operating, and maintaining these hydropower projects 
are repaid to the federal government with interest.
    Power customers purchase electrical power generated at federal 
multi-purpose projects that have been authorized for hydropower 
development, and are paying back 100% of the costs of these facilities:
          the federal capital investment in generation and 
        transmission facilities, with interest, including all of the 
        original investment and the repair and replacement costs;
          an allocated share of the original multi-purpose 
        capital investment (the dam, the reservoir, etc.) and an 
        allocated share of the repair and replacement with interest of 
        multi-purpose facilities;
          all of the annual operations and maintenance cost of 
        generation and transmission facilities;
          an allocated share of the annual operations and 
        maintenance costs of multi-purpose facilities; and
          the portion of the cost of federal irrigation 
        projects that is deemed to be beyond the ability of the 
        irrigators to repay.
          $1.2 billion of the $2.8 billion total federally 
        financed power facilities (Power's share of the dams and 
        transmission) have been paid back.
    Protecting the Federal Hydropower Investments in the West is not 
only about providing hydropower, flood control, municipal and 
industrial water supply, irrigation, recreation, navigation, fish and 
wildlife, it is also a sound business decision for the United States. 
The Corps of Engineers has determined that the Missouri River dams have 
prevented $25 billion in flood damage since 1938, thus repaying the 
original invest in just the dams of $1.2 billion many times over. The 
federal hydro system has returned the investments of the past and will 
continue to return the investments of the future.
    Thank you.
                                 ______
                                 
    Mr. McClintock. Thank you for your testimony. Our next 
witness is Mr. Andrew Fahlund. He is the Senior Vice President 
of Conservation for American Rivers, Washington, D.C. His group 
is referenced in several of the opening statements, and I want 
to stress is here at the invitation of the Minority Party. Mr. 
Fahlund for five minutes.

     STATEMENT OF ANDREW FAHLUND, SENIOR VICE PRESIDENT OF 
        CONSERVATION, AMERICAN RIVERS, WASHINGTON, D.C.

    Mr. Fahlund. Mr. Chairman and Members of the Subcommittee, 
thank you for inviting me to testify before you today.
    I am Senior Vice President for conservation programs 
through American Rivers. We were founded in 1973 with offices 
throughout the nation, and we are the leading voice for healthy 
rivers and the communities that depend on them.
    Hydropower dams have flooded forests, destroyed fisheries, 
diminished recreational opportunities and caused great harm to 
the long-term viability of mostly rural and coastal economies 
that depend on those resources. However, when hydropower is 
sited, operated, mitigated appropriately, hydropower can be a 
tremendous benefit to the nation. That is why American Rivers 
is signatory to settlements supporting the continued operation 
of thousands of megawatts and supports the new development of 
thousands more.
    To have a serious conversation about increasing our 
nation's hydropower resources, let us look at where the big 
opportunities really lie instead of scapegoating the interests 
of recreation, fisheries, tribal resources, and environmental 
sustainability. The majority of people in the hydropower 
industry, the environmental community and government have moved 
beyond that sort of simplistic thinking. I want to touch on the 
two greatest opportunities to increase hydropower capacity in 
the United States and address two of the greatest threats.
    The first is to use existing infrastructure. Some Federal 
agencies estimate we could increase Federal hydropower output 
by as much as 30 percent by simply replacing old turbines and 
generators. This may present an opportunity to also reduce 
environmental impacts and would spark job creation through the 
manufacture and installation of those devices. Adding turbines 
to non-hydropower dams, pipes and canals offers some potential 
as well. Numerous tax incentives and renewable energy portfolio 
requirements have included this sort of incremental hydropower, 
and we have supported that as well.
    The second is to better coordinate the operations of dams 
within each basin. Hydropower dams are owned and regulated by a 
patchwork of entities. They typically serve many more functions 
than simply generating power, and those are often competing. In 
fact, if we really wanted to maximize hydropower production, we 
would stop diverting water out of streams for consumptive use. 
That is not something that most would support. However, 
efficiency is part of the answer.
    We can make some big gains in power production as well as 
improve other ways of managing water if we require agencies to 
periodically review and coordinate dam operations on a basin-
wide scale and balancing all of the competing interests.
    Of the threats, perhaps the greatest to hydropower 
production in the near term is drought. Models are fairly 
universal in their productions. The climate change will result 
in less snow pack and more drought. Confronting the causes of 
climate change is vital to maintaining our hydropower capacity 
as well as to protecting fisheries and other species.
    The other threat that I would like to highlight is 
political paralysis. Living in a democracy means that getting 
anything done typically involves consensus and collaboration. 
One side may win at the expense of the other for a short time, 
but those victories are fleeting. Continuing to fight the old 
flights of zero sum gains will continue to lead us into court 
and stalemate and won't advance the cause of hydropower 
environmental restoration or anything else.
    We need to move forward with co-equal goals of power 
production, environmental enhancement and sustainable water 
supplies. That may sound Pollyanna to some, but I have seen 
what success can look like in places like Penobscot in Maine 
and the Klamath in Oregon and California.
    I visited the dams in the Klamath Basin in 2002 at the very 
height of the hostilities there, and rather than seeing despair 
and cynicism some of us saw opportunity and hope. As we began a 
dialogue among the many stakeholders we understood that what 
each of us wanted was not water, electricity or fish, but 
predictability, trust and hope to raise families, to make a 
living, and maintain a way of life. We reached agreement on 
power issues, water issues and fish issues when we all started 
viewing each other as neighbors who rise and fall together. Are 
the needs of a farmer in Klamath Falls any more or less 
important than a fisherman in Eureka? Not anymore. And that was 
a remarkable transformation.
    Discussions about hydropower often get derailed into a 
referendum on dam removal. Despite the claims of some, dam 
removal is not the biggest threat to hydropower capacity in 
America. I would be the first to agree that suggesting all or 
even most dams should be removed is a radical notion, but no 
more radical than suggesting that all dams should remain no 
matter what the cost. Dams are not monuments. Dams are tools 
and tools wear out or become obsolete.
    Leaving our children with the burden of an environmental 
deficit is no less insidious than leaving them with the burden 
of a financial one, and we believe it is possible to protect 
the environment while protecting our investments in hydropower 
and other water infrastructure.
    Thank you for the opportunity to testify, and I would be 
happy to answer your questions.
    [The prepared statement of Mr. Fahlund follows:]

 Statement of Andrew Fahlund, Senior Vice President for Conservation, 
                            American Rivers

1. Introduction
    Chairman McClintock, Ranking Member Napolitano, and Members of the 
Subcommittee: thank you for this opportunity to testify today and to 
share American Rivers' perspective on U.S. hydropower policy.
    American Rivers is the nation's leading voice for healthy rivers 
and the communities that depend on them. We believe rivers are vital to 
our health, safety and quality of life. American Rivers mobilizes an 
extensive network comprised of tens of thousands of members and 
activists located in every state across the county. We have been 
working to protect and restore the health of rivers that have been 
impacted by hydropower dams since we were founded in 1973. We also 
serve on the Steering Committee of the Hydropower Reform Coalition, a 
broad consortium of more than 150 national, regional, and local 
organizations with a combined membership of more than one million 
people. In doing so, we represent stakeholders--anglers, canoeists, 
outdoor enthusiasts, conservation advocates, and lake homeowners--who 
seek to improve the water quality, fisheries, recreation, and general 
environmental health of rivers that have been damaged by hydropower dam 
operations. We are active in many hydropower licensing proceedings 
currently pending before the Federal Energy Regulatory Commission 
(FERC), as well as other hydropower-related proceedings involving the 
Bureau of Reclamation and the Army Corps of Engineers. We have 
constructively contributed to numerous hydropower-related policy 
discussions.
2. Towards a balanced Federal hydropower policy that encourages 
        environmentally responsible hydropower development and 
        operation
    American Rivers is emphatically not anti-hydropower. We seek to 
improve the nation's hydropower system by encouraging increased 
generation while improving environmental performance. Conventional 
hydropower is one of the oldest and most well-established among a 
growing number of technologies that provide low-emissions alternatives 
to fossil-fuel energy. Nationally, hydropower provides about 75,000 
megawatts of capacity, and represents nearly 7% of total generation. We 
expect that hydropower will continue to be a part of our nation's 
energy mix for years to come, and accordingly we have signed dozens of 
agreements supporting the continued, long-term operation of 
hydroelectric dams that together provide our nation with thousands of 
megawatts of generating capacity. Reasonable modifications have 
dramatically improved the performance of these dams, providing fish 
passage, improving flows, enhancing water quality, protecting riparian 
lands, and restoring recreational opportunities.
    American Rivers supports the development of new hydropower 
resources that can be brought online while avoiding significant 
additional harm to local ecosystems. In recent years, we have worked 
closely with the National Hydropower Association to develop and promote 
several pieces of legislation that provides incentives for new 
hydropower generation. We support hydropower that is developed and 
operated in a responsible manner that avoids harm to America's precious 
river resources. Given the very real environmental and social impacts 
of global climate change--especially on vital freshwater systems -we 
understand the need to develop new sources of energy that can replace 
America's reliance on fossil fuels. Hydropower is and will continue to 
be an important part of this mix.
    However, we also know that the energy we receive from hydropower 
comes at an enormous cost to the health of our nation's rivers and 
communities. Hydropower is unique among renewable resources in the 
scale at which it can damage the environment. Hydropower's 
environmental and social impacts are serious and extremely well 
documented. Hydropower dam operations are responsible for the 
extinction and near-extinction of a number of species. Hydropower 
plants often divert water around entire sections of river, leaving them 
dry or constantly alternating between drought and flood-like 
conditions. Hydropower dams have flooded forests, destroyed fisheries, 
diminished recreational opportunities, and caused great harm to the 
long-term viability of the local--mostly rural--economies that depend 
on those resources.
    The harm caused by most hydropower dams can be avoided if 
hydropower is sited, constructed, and operated in a responsible manner. 
A few simple changes can make an enormous difference in the health of a 
river. Hydropower operators can change the timing of power generation 
to mimic a river's natural hydrologic conditions, stabilize lake levels 
and dam releases to protect riverside land from erosion, provide fish 
ladders and other measures that protect fish and allow them to pass 
safely upstream and downstream of dams, restore habitat for fish and 
wildlife, alter the design and operation of plants to maintain 
appropriate temperature and oxygen levels in rivers, and provide public 
access and release water back into rivers so that people can fish, 
boat, and swim. These types of changes have a miniscule impact on the 
overall generation of the nation's hydropower fleet. In fact, an 
analysis by FERC found that since Congress passed laws in the 1986s to 
encourage these types of improvements, overall generating capacity has 
actually increased by 4.1%. The benefits to human and natural 
communities have been immense.
    There are, however, some rare cases--where the environmental, 
social, and economic impacts of a dam cannot be adequately mitigated. 
Where those impacts outweigh the benefits of a dam, American Rivers and 
others sometimes advocate for decommissioning of hydropower dams. We 
take this extraordinary step with great caution, and only as a last 
resort: out of 20,441 MW of capacity that has been relicensed by FERC 
since 1986, American Rivers' advocacy has led to roughly 222 MW of 
licensed capacity being identified as suitable for decommissioning. Our 
analysis indicates that this 222 MW is roughly equivalent to the 
capacity of existing FERC-regulated projects that are in non-compliance 
and not generating because their owners have failed to maintain them in 
proper working condition. It represents just 1% of the capacity 
relicensed by FERC since 1986, and only two-tenths of one percent of 
the nation's total hydropower capacity. American Rivers has supported 
policies and projects that have already resulted in much more new 
hydropower capacity being brought online than capacity that has been 
removed.
    The threat of climate change demands urgent action on two major 
fronts. First, we must dramatically reduce greenhouse gas emissions. 
Our current hydropower capacity contributes to decreased dependence on 
fossil fuels and our recommendations below represent suggestions for 
how to build additional capacity without causing significant additional 
harm to healthy rivers and the communities that depend upon them. 
Ironically, because the forecasts of climate change in the west call 
for less rain and snow, the fundamental fuel for hydropower is 
significantly compromised.
    Second, even if we bring emissions under control, the carbon 
already in the atmosphere from historic emissions will cause inevitable 
changes to the climate. We must therefore also take immediate action to 
help both human and natural communities prepare for inevitable climate 
changes. By protecting and restoring healthy watersheds, increasing 
water efficiency, and improving the quality of our infrastructure we 
can build resilient communities and ecosystems that stand a better 
chance of weathering the impacts of global warming.
    America is still blessed with many healthy, free-flowing rivers, 
wetlands, and natural floodplains that protect communities, support 
local jobs, and provide significant economic value. In fact, in many 
rural economies, recreation and tourism play a greater role in job 
creation and economic productivity than any other sector. We must 
preserve and restore these natural resources and promote them as a 
vital part of our economy. Now and in the years to come, we need 
hydropower projects that are sited, built, and operated to produce 
power while minimizing impacts to the rivers that sustain America's 
human and natural communities. Federal agencies with a role in U.S. 
hydropower policy, including the Bureau of Reclamation, the U.S. Army 
Corps of Engineers, the Department of Energy, and the Federal Energy 
Regulatory Commission must make the enhancement of environmental 
quality--at existing and new sites alike--a top priority.
    A balanced and responsible hydropower policy must encourage 
responsible development while continually holding developers and 
federal operators accountable for their environmental impacts and 
insisting on the strictest performance standards. It must remove 
unnecessary obstacles to development while recognizing at the most 
fundamental level that a high level of environmental performance it is 
a reasonable and necessary cost of doing business. It must encourage 
new development to take place while also accepting that some sites are 
simply not appropriate for new or increased hydropower production. 
Congress must address both sides of this equation equally.
3. Opportunities for new hydropower development
    American Rivers supports the development of hydropower projects 
that are sited, constructed, and operated in a responsible manner so as 
to avoid harm to America's precious river resources. Hydropower 
projects that re-use existing water and hydropower infrastructure are 
the best candidates for responsible development. There is enormous 
potential from these types of projects. The U.S. Department of Energy 
has estimated that more than 12,000 MW of new capacity could be added 
simply by replacing antiquated generating equipment, and more than 
12,600 MW more could be added by adding turbines to non-powered dams 
(only 3% of the nation's dams are currently generating power), many of 
which are owned and operated by the Federal government. With roughly 
75,000 megawatts of installed capacity in the U.S., these types of 
projects could provide a 30% increase in installed capacity, all 
without the enormous costs and risks associated with new dam 
construction. Encouraging such capacity additions at existing federal 
facilities would be one of the most cost-effective ways to use scarce 
taxpayer dollars to protect federal investments in water 
infrastructure.
    American Rivers has long advocated for policies that would 
encourage or require hydropower operators to upgrade aging turbines and 
generating equipment with updated, modern equipment. We believe that 
the public should receive the full benefit of each drop of water that 
passes through a turbine, and antiquated, inefficient equipment dilutes 
these benefits. Efficiency improvements are relatively low-cost, use 
turbines and equipment that is manufactured in the United States, and 
can often contribute to improved environmental outcomes. These 
efficiency upgrades are the simplest, most cost-effective, and lowest-
impact means of increasing hydropower generation. The potential gains 
in generation are significant: in many cases, these upgrades can result 
in a 10-20% increase in generation from the same amount of water. There 
are substantial environmental benefits to these upgrades as well: 
modern turbines often feature designs which are less harmful to fish, 
and can operate efficiently across a different range of release levels, 
allowing for managed flow regimes which more closely mimic a natural 
river.
    Turbines can also be added to many existing hydropower and non-
hydropower dams. While these retrofits are not appropriate in every 
case, they offer new capacity for minimal additional environmental 
impacts when done right. In some cases, retrofitting existing dams for 
hydropower can leverage additional environmental improvements to the 
affected river reach. For instance, a pending retrofit at the Holtwood 
project on the Susquehanna River in Pennsylvania will more than double 
that project's generating capacity while also providing for 
substantially improved fish passage. Several years ago, American Rivers 
worked closely with the hydropower industry and Members of Congress to 
craft legislative language that would encourage such forward-thinking 
development. This language has since been incorporated into the federal 
law which provides a Production Tax Credit for Renewables, providing 
developers with an incentive to develop at existing dams that are 
currently operated for flood control, navigation, and water supply and 
that could be developed without harmful changes to river flows.
    Finally, an increasing number of developers--especially in the 
west--are exploring off-stream hydroelectric development. Some 
developers propose to place turbines in existing water conveyance 
pipes. Others are adding hydropower capacity to irrigation canals. 
Still others are placing turbines in municipal water treatment 
facilities. While there is no official estimate of how much capacity 
may be available from new conduit projects, we expect that it may be 
significant, and new technologies are improving the economic viability 
of these types of projects. Many of these projects have the potential 
to create substantial environmental benefit. For instance, some 
irrigation districts are using the revenue from power sales to fund 
projects that will result in the more efficient use of water, leaving 
more water in the river to provide ecosystem services. American Rivers 
is working with conduit developers to find ways to lower the cost and 
effort associated with developing these types of projects.
3.1 Balanced management of the federal hydropower system
    The 171 hydropower plants that make up the federal hydropower 
system provide more than 37,000 MW of electric capacity, or 50% of 
total hydropower production in the United States. The federal 
investment in hydropower production at these facilities is typically 
seen as secondary to the dams' other authorized purposes, and 
generation is very often secondary to flood control operations or water 
deliveries for agriculture. In western basins where reservoirs are used 
for multiple purposes, outdated operational guidelines, poor water 
management and conservation practices, and an alarming lack of 
coordination among multiple federal and non-federal projects are 
leaving megawatts on the table. The Bureau of Reclamation and the Army 
Corps of Engineers should improve their cooperation with FERC and its 
non-federal licensees to ensure that water control and hydropower 
systems are being operated efficiently on a basin scale. Additionally, 
any water that is diverted from storage reservoirs for consumptive use 
is water that is not available to generate power. Federal operators 
should, as they examine water delivery contracts, consider the 
relationship between end-user efficiency and hydropower production, and 
take steps to ensure that hydropower generation is not threatened by 
inefficient and wasteful consumptive water use.
    American Rivers has worked on dozens of hydropower licensing 
proceedings before the FERC over the past two decades, and our 
experience has shown that the comprehensive review of hydropower 
projects operations with extensive stakeholder involvement results in 
significant improvements to environmental quality while retaining 
nearly all of those projects' capacity to generate electricity. While 
the concept of a periodic review that is open to all interested members 
of the public is a long-standing one in the realm of non-federal 
hydropower projects, a similar process is lacking--and needed--for 
hydropower facilities that are owned and operated by the federal 
government.
    Each Federal project has a plan of operation, but many of these 
plans have not been revised in decades and are hopelessly out of date, 
despite laws that permit and/or require Federal operators to review the 
operational plans for their facilities. We recommend that this 
Subcommittee direct the Federal operators over which it has 
jurisdiction to examine changes to the design, configuration, or 
operation of their existing dams in order to improve upon existing 
operations, and to periodically repeat this analysis. Federal operators 
should be directed to consider efficiency upgrades, opportunities to 
install new physical capacity, and more operational changes that will 
enhance and maximize the array of beneficial public uses these dams 
provide, including energy production, environmental protection, water 
supply, navigation, recreation, and whether facilities are receiving a 
market return for their services, including energy production.
3.2 Basin-scale coordination of multiple projects
    While individual hydropower dams have their own impacts, the 
cumulative effects of multiple hydropower dams are often much greater 
than the simple sum of their direct impacts. A single-dam may block 
fish passage and displace wildlife. A series of dams can harm an entire 
watershed or cause the extinction of an entire fishery, even if the 
effect of each of the individual dams seems relatively mild when 
considered in isolation. The impact of a single dam that kills only 5% 
of fish in its turbines may seem relatively small, but eight dams along 
the same river, each of which only kill 5% would reduce the river's 
fish population by more than a third, placing a cumulative burden on 
the population that is too great to be sustained over time.
    The solution to such cumulative impacts is to address hydropower at 
a watershed or basin scale instead of at the individual project level. 
It is often possible to get an increase in generation and significant 
improvements in environmental quality when the operation and management 
of multiple facilities is addressed in a coordinated manner. For 
instance, consider Maine's Penobscot River basin. For decades, a series 
of dams in this basin blocked access to high-quality habitat and all 
but wiped out the river's valuable Alewife, Atlantic Salmon, and Shad 
fisheries. When these projects were relicensed, parties examined the 
entire basin and came up with a plan that would restore more than 1000 
miles of habitat--and millions of fish--by removing two dams, bypassing 
a third with a nature-like fishway, and installing fishways at others 
while allowing for a net increase in power generation. This plan also 
allows the remaining dams to generate more, concentrating environmental 
restoration measures where they are most needed and power production 
where it will have the least impact on the basin as a whole.
    The Penobscot agreement demonstrates how the coordinated review and 
planning of hydropower in a basin can result in more power and better 
environmental outcomes. Unfortunately, the circumstances on the 
Penobscot--where all of the dams were owned by a single entity and 
subject to the jurisdiction of a single agency--are the exception 
rather than the rule. Consider, for instance, California's rapidly 
declining populations of Salmon and Steelhead. A combination of federal 
and non-federal dams in six watersheds in California (the American, the 
Feather, the Merced, the Stanislaus, the Tuolumne, and the Yuba) blocks 
these commercially valuable fish from accessing more than 2,200 miles 
of their highest-value historic habitat.\1\ These dams are managed by a 
patchwork of federal and non-federal operators. The operators 
coordinate the management of these watersheds for water supply and 
power production. But when it comes to mitigating the effects of this 
environmental catastrophe, each operator points its fingers at the 
others. There is not one major river in the Central Valley that has 
even a single fish passage structure. All the major salmon runs are 
stuck on the valley floor, unable to ascend to the upper reaches of 
these watersheds where the best quality habitat is located. FERC, its 
licensees, and the federal operators in these basins have failed to end 
this avoidance of responsibility by coordinating effectively to find 
basin-wide solutions to restore fish passage to this valuable historic 
habitat. As a result, these species are at the brink and downstream 
users are stuck with a disproportionately higher burden for addressing 
their protection and restoration.
---------------------------------------------------------------------------
    \1\ Lindley, S.T. et al, ``Historical Population Structure of 
Central Valley Steelhead and its Alteration by Dams,'' 2006.
---------------------------------------------------------------------------
    There is an urgent need for the type of basin-scale planning and 
coordination of hydropower projects that led to the Penobscot 
agreement. We recommend that Congress direct the Bureau, the Corps, and 
FERC to cooperate to address multiple projects in a coordinated fashion 
to increase power generation and environmental outcomes at the basin--
not project--scale. For instance, when FERC is relicensing a project in 
a basin where the Corps or the Bureau also operate hydropower projects, 
those agencies should participate as cooperating agencies in FERC's 
analysis and use that opportunity to review the operations of their own 
projects in coordination with the FERC-licensed projects.
4. Conclusion
    A balanced U.S. energy policy must recognize that hydropower has 
impacts as well as promise, and it should address both. New hydropower 
development must be sited, operated, and mitigated responsibly, and it 
must simultaneously encourage increased generation and improved 
environmental performance at new and existing projects. American Rivers 
supports the development of new hydropower resources that can be 
brought online responsibly, avoiding significant additional harm to 
local ecosystems. We offer the following recommendations to this 
Committee as it considers how to protect the federal investment in 
hydropower:
        1.  Encourage the development of new capacity using existing 
        water infrastructure, espeicaly capacity and efficiency 
        upgrades and power added to non-powered dams. As a class, these 
        hydropower projects can be brought online for the least cost 
        and with the least additional impact to the environment, and 
        could provide as much as a 30% increase in hydropower 
        generation.
        2.  Direct Federal hydropower operators to evaluate their 
        facilities and operations as well as the relative values of 
        existing authorized purposes in order to find new opportunities 
        to add power, improve efficiency, and improve environmental 
        quality.
        3.  Direct Federal hydropower operators to coordinate with each 
        other and with FERC to take a basin-scale approach to 
        hydropower development and reoperation rather than a myopic 
        project-by-project view, and encourage multiple operators 
        within a basin to find shared solutions that will increase 
        generation, use water more efficiency, and restore 
        environmental quality.
    Environmental quality is not a luxury good: leaving our children 
with the burden of an environmental deficit is no less insidious than 
leaving them with the burden of a financial one. Fortunately, it is 
possible to protect the environment while protecting our investments in 
hydropower and other water infrastructure. American Rivers has learned 
some important lessons in our nearly four decades of experience with 
hydropower. Disputes over water are complex and contentious, and 
finding solutions to those problems requires a commitment on the part 
of each party to see that all other parties interests are respected. A 
solution that is based on ``abundance'' as it is defined by one party 
to a dispute will never be satisfactory to all. We must find solutions 
that seek abundant water, abundant clean energy, abundant fish and 
wildlife, and abundant jobs. When traditional foes stop hurling 
accusations at each other and instead sit down, roll up our sleeves, 
and work together to meet each others interests, we can and often do 
find lasting, mutually agreeable solutions.
    Thank you again for this opportunity to testify you today. I look 
forward to answering your questions.
                                 ______
                                 
    Mr. McClintock. Thank you for your testimony. Our next 
witness is Mr. Roman Gillen. He is the President of the Board 
of Directors of the Oregon Rural Electric Cooperative 
Association in Salem, Oregon.

STATEMENT OF ROMAN GILLEN, PRESIDENT OF THE BOARD OF DIRECTORS, 
   OREGON RURAL ELECTRIC OPERATIVE ASSOCIATION, SALEM, OREGON

    Mr. Gillen. Thank you, Mr. Chairman. Good morning, Mr. 
Chairman and Members of the Subcommittee. I am Roman Gillen, 
President and CEO of Consumers Power, Incorporated, an electric 
distribution cooperative located in western Oregon, in 
Philomath near Corvallis. Thank you for this opportunity to 
testify before the Subcommittee today and for holding this 
hearing on this important topic.
    CPI is a customer of the Bonneville Power Administration 
through our generation and transmission cooperative, P&GC 
Power, of which I am a board member. CPI serves over 17,000 
members in parts of six counties from the Cascade Mountains to 
the Pacific Ocean, including the 4th Congressional District 
served by Representative Peter DeFazio. Most of our electricity 
sales are to residential members. Today I also represent the 
Oregon Rural Electric Cooperative Association as its board 
president. ORECA represents the legislative interests of all 18 
Oregon electric co-ops, serving over 200,000 members in mostly 
rural and remote parts of Oregon.
    My testimony today centers on three Federal policy issues 
of concern to our members: high wind, high water, over-
generation events; proposals to force power marketing agencies 
to sell electricity at market-based rates; and salmon recovery 
on the Columbia River Basin.
    As this Committee knows, the Northwest is blessed with an 
extremely valuable Federal asset, the Federal Columbia River 
Power System. CPI helps pay for this asset through the rates we 
pay as a preference customer of BPA. Today, this same Federal 
system plays a leading role to support the growth of non-hydro 
low variable cost renewable resources, especially wind.
    BPA Administrator Steve Wright told this Committee in March 
that the amount of wind generation in the Northwest may triple 
in size over the next six years. This really concerns me as I 
believe the Northwest is ill equipped to deal with such rapid 
growth in wind generation. Problems that occur when too much 
wind coincides with an abundance of hydropower and low utility 
loads in the spring will only get worse as the Northwest 
emerges from the drought conditions of recent years.
    The second Federal policy issue I would like to speak to 
concerns wholesale power rates in the Northwest. Cost-based 
power is the life blood of utilities like CPI in the Northwest, 
so we are gravely concerned to see proposals re-emerge that 
force PMAs to sell power at market rates. We oppose legislation 
that arbitrarily taxes power rates in select regions of the 
U.S. Northwest preference customers, including CPI members, pay 
all of the costs to operate and maintain the Federal hydropower 
system. Forcing PMAs to sell power at market rates would force 
utilities like CPI to raise retail rates, perhaps dramatically, 
causing great harm to our residential members, especially those 
on fixed incomes. Many of our members depend on electricity to 
heat their homes in the winter with few alternatives to choose 
from. With the cost of food and gasoline already increasing it 
makes no sense to add an additional energy tax, especially upon 
consumers who can least afford it.
    Finally, I would like to say a few words about salmon 
restoration efforts in the Northwest. We sincerely hope that 
Federal Judge James Redden approves the 2008 biological opinion 
when he hears arguments on the plan next Monday, May 9. In that 
vein, I thank Chairman Hastings and Representative DeFazio for 
their excellent March 11th opinion piece that strongly endorsed 
this biop.
    CPI and other BPA customers also strongly support the biop 
even though it comes at a high cost to our members and other 
BPA customers who are footing the bill. We also thank Chairman 
Hastings and others on the Committee for their work to ensure 
that salmon recovery investments are working and that they are 
cost-effective.
    I thank the Subcommittee for allowing me to participate in 
this discussion and I would be happy to answer any questions.
    [The prepared statement of Mr. Gillen follows:]

 Statement of Roman Gillen, President and CEO, Consumers Power, Inc., 
      and President, Oregon Rural Electric Cooperative Association

I. Introduction
    Mr. Chairman and Members of the Subcommittee, I am Roman Gillen, 
President and CEO of Consumers Power, Inc. (CPI), an electric 
cooperative located in Western Oregon in Philomath, just outside of 
Corvallis. Thank you for the opportunity to testify before the 
Subcommittee today, and for holding this hearing on this important 
topic. I also wish to thank Committee Chairman Rep. Doc Hastings and 
Committee Members Rep. Rob Bishop, Rep. Peter DeFazio and Rep. Raul 
Labrador for their work to protect federal hydropower investments in 
the Northwest on behalf of their constituents who are customers of the 
Bonneville Power Administration (BPA). CPI is a customer of BPA through 
our Generation and Transmission Cooperative, PNGC Power.
    Today I am representing both CPI and the Oregon Rural Electric 
Cooperative Association (ORECA). We are members of NRECA, the National 
Rural Electric Cooperative Association, and we are members of the 
Public Power Council, a trade association of BPA customers led by my 
fellow panelist Scott Corwin. I would also like to recognize my other 
panelists, especially Tom Karier of Washington State, a member of the 
Northwest Power and Conservation Council.
    CPI is an electric distribution cooperative formed in 1939. CPI's 
60 employees serve 17,500 members in parts of six counties covering a 
3,500 square mile service area, from the Cascade Mountains to the 
Pacific Ocean. We are the fourth largest electric cooperative in Oregon 
with 22,000 meters and 46 aMW in electricity sales in 2010. 70% of our 
sales are to residential members, 14% small commercial, 14% industrial, 
and 2% irrigation and street lighting.
    My career at CPI began in 1986 in the Information Technology area 
and I have served as President and CEO for the last five years. I am 
CPI's representative on the board of PNGC Power, and I currently serve 
as the board president of ORECA. ORECA represents the legislative and 
regulatory interests of all 18 Oregon electric co-ops, serving over 
200,000 members in mostly rural and remote parts of Oregon with over 
30,000 miles of wire. According to Oregon State University, our 
economic activity directly and indirectly contributes to over 3,000 
jobs in Oregon.
    As you know, electric cooperatives are owned by our customers, who 
we refer to as members. Electric cooperatives are not owned by a 
government or city agency. We are chartered under state cooperative 
statutes and we are governed by a locally elected Board of Directors 
from our membership. Unlike a for-profit business we do not retain 
profits. Any income above expenses is, by law, returned to our members. 
Our goals of accountability, efficiency and meeting customer needs 
resemble those of a for-profit electric utility, but our means of 
getting there are different.
    My testimony today will focus on three issues of concern to CPI's 
ratepayers that are driven by federal policy. These include:
        1.  High wind/high water overgeneration conditions.
        2.  Proposals to force Power Marketing Agencies (PMAs) to sell 
        electricity at market based rates.
        3.  Salmon recovery in the Columbia River Basin.
II. Overgeneration
    As this Committee knows, the Northwest is blessed with a valuable 
federal asset, the Federal Columbia River Power System (FCRPS). As a 
preference customer of BPA, CPI has shared in those benefits for many 
years, and we have shared in paying for them through the rates we pay. 
Today, that same federal system is playing a lead role in supporting 
the growth of non-hydro, low variable-cost, renewable resources, 
especially wind. BPA Administrator Steve Wright told this Committee in 
March that the region's wind generation system may triple in the next 
six years. I am concerned that the Northwest is not ready for that 
rapid growth.
    In June 2010 the region experienced overgeneration conditions, when 
too much wind and water arrived in the system at the same time. We 
expect more high wind/high water events in the future. These events 
could threaten BPA's ability to protect migrating salmon. Some of the 
proposed remedies could cause BPAs customers to pay higher rates for 
electricity. We encourage the Subcommittee to closely examine these 
issues, and we support BPA's ongoing efforts to develop policies that 
protect our ratepayers and maintain reliability in the federal system.
III. PMAs at Cost Based Rates
    We are aware that proposals have reemerged to force PMAs to sell 
power at market rates. We oppose these and any other proposal that 
arbitrarily taxes power rates in some regions. Ratepayers at CPI and 
throughout the Northwest pay all of the costs of operations and 
maintenance of the federal hydropower system. In addition to the annual 
revenue requirement for BPA power of over $2.2 billion, ratepayers fund 
an annual payment on principal and interest of debt to Treasury of over 
$860 million. In exchange, BPA sells power at cost. Power sales at cost 
have been a legal requirement since BPA's inception and are the 
foundation of the contracts that BPA customers signed through 2028. 
Forcing PMAs to sell power at market rates would clearly force CPI to 
raise our rates, perhaps dramatically. This would cause great harm to 
the residential members that we serve, especially those on fixed 
incomes. With the cost of food and gasoline already increasing, it 
doesn't make sense to add an additional energy tax, especially upon 
consumers who can least afford it.
IV. Salmon Recovery
    We are hopeful that Federal Judge James Redden will approve the 
2008 FCRPS Biological Opinion (BiOp) when he hears arguments on the 
plan next Monday, May 9. In that vein, I wish to thank Chairman 
Hastings and Member DeFazio for their excellent March 11 opinion piece 
that so strongly endorsed this BiOp. CPI and other BPA customers also 
strongly support the BiOp, even though it comes at a high cost to our 
members and other BPA customers who are footing the bill. We also wish 
to thank Chairman Hastings and others on the Committee for their work 
to ensure that salmon recovery investments are working, and that they 
are cost effective. As the Chairman knows, the dams at issue in this 
salmon plan provide our region with clean, renewable hydroelectric 
power. In addition, these dams offer residents of the Northwest 
multiple benefits, including a valuable transportation system and 
irrigation source.
    BPA customers have paid over $13 billion for fish and wildlife 
mitigation in the Columbia Basin over the past 32 years. The good news 
is that some of those investments are working. The BiOp is the product 
of a recent historic and unprecedented collaboration of Native American 
tribes, federal agencies, and the states of Washington, Idaho and 
Montana. It is based on the best available science and has been 
reviewed and approved by an independent panel of scientists. It has 
also been reviewed and approved by one of Oregon's best and brightest, 
former Oregon State University professor and current National Oceanic 
and Atmospheric Administration Director, Dr. Jane Lubchenco. We hope 
that May 9 will mark the beginning of a new, successful chapter in 
salmon recovery in the Northwest.
V. Conclusion
    Mr. Chairman and Members of the Subcommittee, thank you for 
inviting me to testify at this hearing. As a representative of PMA 
customers, I appreciate the opportunity to highlight several issues 
that are of concern to PMA customers in the Northwest: high wind/high 
water overgeneration conditions, proposals to force Power Marketing 
Agencies (PMAs) to sell electricity at market based rates and salmon 
recovery in the Columbia River Basin.
    I thank the Subcommittee for allowing me to participate in this 
discussion.
                                 ______
                                 
    Mr. McClintock. Thank you for your testimony. Our next 
witness is Mr. Tom Karier. He is a Council Member of the 
Northwest Power and Conservation Council in Portland, Oregon.

   STATEMENT OF TOM KARIER, COUNCIL MEMBER WASHINGTON STATE, 
   NORTHWEST POWER AND CONSERVATION COUNCIL, PORTLAND, OREGON

    Mr. Karier. Chairman McClintock and Members of the 
Subcommittee, thank you for the opportunity to testify today at 
this important hearing on protecting Federal hydropower 
investments in the West.
    My name, as you said, is Tom Karier, and I am one of two 
Washington members of the Northwest Power and Conservation 
Council, and Chair the Council's Power Committee.
    The Council is a compact of the four Northwest states of 
Idaho, Montana, Oregon and Washington. The Council is 
authorized by Federal law, the Northwest Power Act of 1980, to 
prepare and periodically update a Northwest Power Plan that is 
implemented by Bonneville Power Administration. The power plan 
is also used by electric utilities throughout the Northwest in 
preparing their own lease cost plans, and in my State of 
Washington our renewable portfolio standards law requires the 
energy efficiency savings be calculated using the Council's 
methodology. So the reach of the Council's planning is region 
wide.
    Hydropower provides more than half of the electricity in 
the Northwest. It is in this context as an energy policymaker 
in a region rich in hydropower that I bring five messages for 
you today.
    First, preserving the capability of the existing hydropower 
system will keep power costs and power system carbon emissions 
low in the Northwest. In the current version of power plan 
which we completed last year, we assess the impacts of removing 
the four Federal dams in the lower Snake River from the 
regional power supply. The results are that existing natural 
gas-fired and coal-fired generating plants would be used more 
intensively. The region would export less energy and import 
more. Carbon emissions would increase by three million tons per 
year, and the annual cost of the power system would increase by 
more than $530 million by 2020. And because Bonneville sells 
the output of those dams, the cost to the wholesale power would 
increase 24 to 29 percent.
    Second, hydropower helps back up intermittent wind power. 
Hydropower is an excellent companion for wind power because it 
can be increased or decreased almost instantaneously to match 
the variability of wind. The availability of this balancing 
energy from hydropower is one important reason why wind power 
is proliferating in the Northwest from about 4,500 megawatts of 
installed capacity today to more than 6,000 megawatts in the 
next few years.
    Balancing is providing a new source of income for 
Bonneville and the utilities that own dams. For Bonneville, 
this means 30 to 50 million dollars in annual revenue that 
helps to offset customer rates. As well, some utilities that 
own hydropower dams are realizing as much value from providing 
balancing services for wind as they are from selling surplus 
power.
    Third, energy efficiency complements and protects the 
Northwest heritage of clean and affordable hydropower. In the 
Northwest Power Act, energy efficiency is the highest priority 
resource to meet new demand for power. Bonneville has a program 
to require efficiency consistent with our power plan. In the 31 
years since the Power Act the Northwest has acquired 4,250 
average megawatts of energy efficiency. As generated power, 
that would be equivalent to the entire States of Idaho and 
Montana today.
    In our current power plan we identify 5,900 more megawatts 
at an average cost of 3.5 cents per kilowatt hour. That is 
three times less than the lowest cost new generating resource. 
That much energy efficiency could meet 85 percent of the new 
demand for power over the 20-year time period for this plan. 
Complementing hydropower with energy efficiency stretches the 
benefits of hydropower.
    Fourth, while hydropower affects fish and wildlife, the 
effects can be mitigated. The Council's Columbia River Fish and 
Wildlife Program includes strategies to improve dam passage 
survival for migratory fish. I believe these measures in 
combination with improvements in fish habitat and the careful 
use of artificial production are some of the reasons for the 
increasing number of adult fish returns from the ocean to 
spawn.
    Fifth, and in conclusion, in our region the mix of 
hydropower, energy efficiency, and wind power is providing 
electricity consumers with a consistent supply of low-cost 
carbon-free energy. By continuing to add energy efficiency to 
the power supply the region will preserve and enhance the 
flexibility of the hydropower system to meet demand while also 
providing low-cost balancing services for increasing amounts of 
wind power.
    Thank you again for the opportunity to testify today and I 
would be glad to answer questions.
    [The prepared statement of Mr. Karier follows:]

          Statement of Tom Karier, Washington Council Member, 
                Northwest Power and Conservation Council

    Chairman McClintock and members of the Subcommittee, thank you for 
the opportunity to testify today at this important hearing on 
protecting federal hydropower investments in the West. My name is Tom 
Karier, and I am one of two Washington members of the Northwest Power 
and Conservation Council and chair of the Council's Power Committee.
    The Council is authorized by federal law, the Northwest Power Act 
of 1980 (Public Law 96-501; 94 Stat. 2717), to prepare and periodically 
update a Northwest Power Plan that is implemented by the Bonneville 
Power Administration, a federal power marketing administration. 
Bonneville markets the output of the Federal Columbia River Power 
System, which comprises 31 hydropower dams and one non-federal nuclear 
power plant in the Northwest. Through its customer utilities, 
Bonneville supplies about 30 percent of the electricity consumed in the 
Northwest so the Council's power plan directly affects a significant 
portion of the region's electricity ratepayers. But the plan also is 
used by utilities throughout the region as they develop their own 
integrated resource plans, and Washington's renewable portfolio 
standard law requires that energy efficiency savings be calculated 
using the Council's methodology. So the reach of the Council's planning 
goes far beyond Bonneville.
    The Federal Columbia River Power System includes many of the 
largest hydroelectric dams in the United States and provides 56 percent 
of the hydropower generated in the Northwest. Regionwide, hydropower is 
our largest source of electricity, averaging more than half of the 
power generated under normal precipitation.
    The first dams of the Federal Columbia River Power System were 
constructed during the Depression, and so for more than 70 years our 
region has been enjoying clean, renewable, low-cost electricity thanks 
to the water power of the Columbia River and its tributaries.
    It is in this context, as an energy policymaker in a region rich in 
hydropower, that I am testifying today. The Northwest Power and 
Conservation Council is working to ensure the long-term viability of 
the Columbia River Basin hydropower system for present and future 
generations while also protecting and enhancing fish and wildlife that 
have been affected by hydropower dams.
    The Council was formed by the states of Idaho, Montana, Oregon, and 
Washington in 1981 in accordance with the Power Act. Each state's 
governor appoints two members to the Council. Through the Council, 
Northwest citizens can participate in determining how growing 
electricity needs will be met in the region, and also how fish and 
wildlife will be protected from the impacts of hydropower dams. The 
Council's power plan looks 20 years into the future, and by law we 
review the plan for revisions every five years. We issued our current 
plan, the sixth revision since the Council was created, in 2010.
    According to the Power Act, the purpose of the power plan is to 
assure an adequate, efficient, economical, and reliable power supply 
for the Northwest region. The Act also recognized that development of 
the region's hydropower dams in the Columbia River Basin had 
detrimental effects on migratory and resident fish, and also wildlife, 
and required the Council to develop a program to mitigate those 
effects. The Council's Columbia River Basin Fish and Wildlife Program 
is an integral part of the Council's power plan. The Council's power 
plan and the fish and wildlife program are developed through open, 
public processes to involve the region's citizens and businesses in 
decisions about the future of these two interdependent aspects of the 
Pacific Northwest environment and economy.
Removing hydropower dams would increase carbon emissions and raise 
        electricity costs
    The region's hydroelectric system continues to be the Northwest's 
most important generating resource. Preserving the capability of the 
existing system will keep power costs and carbon emissions low compared 
to the rest of the country.
    Concerns about climate change have altered the power planning 
landscape dramatically, both nationally and in the West. These concerns 
have resulted in new polices that affect electricity resource choices, 
such as restrictions on new coal-fired power plants because of concern 
about their emissions. In developing the Sixth Power Plan, the Council 
included estimates of the future cost of complying with carbon policies 
as a risk. Energy efficiency mitigates the risks of volatile fuel 
prices and unknown carbon costs.
    The Northwest power system emits about half the carbon dioxide per 
kilowatt-hour of the nation or the rest of the western states. This is 
due to the large role played by the hydroelectric system of the region. 
A power system that maximizes cost-effective energy efficiency and 
renewable resources is a system that also minimizes the risk of 
exposure to the uncertain future cost of complying with carbon-
reduction policies. To quantify the value of such a system, the 
Council's Sixth Power Plan includes an analysis of the effects of 
reduced hydropower capability. The analysis, which technically was one 
of our future-scenario models, examines the effects of removing the 
four federal dams on the lower Snake River--Lower Granite, Little 
Goose, Lower Monumental, and Ice Harbor--from the regional power 
supply. While the scenario is specific to the removal of those four 
dams, the results could apply to other changes that reduce the 
capability of the hydroelectric system for any reason.
    The lower Snake River dams provide 1,110 average megawatts of 
energy under average water conditions, about 5 percent of regional 
annual electric energy needs. In addition, the dams provide 3,500 
megawatts of short-term capacity, a little more than 10 percent of the 
total hydroelectric system capacity, and as part of the Automated 
Generation Control (AGC) System, they provide system reserves to 
maintain the reliability of the power supply. They also provide 
reactive support for the stability of the transmission system.
    The effects of removing the capability of the lower Snake River 
dams are mainly determined by the replacement resources that would be 
required for the power system to duplicate the energy, capacity, real-
time load following, stability reserves and reactive support currently 
provided by the dams. The analysis assumed that the power produced by 
the dams was removed in 2020--half way through the 20-year timeframe of 
the Sixth Power Plan--and the energy and capacity were replaced by 
other least-cost resources selected by the Council's regional portfolio 
model. That is, given the reduced energy and capacity of the 
hydroelectric system, a low-cost and low-risk portfolio of new and 
replacement resources would take the place of the four dams.
    The analysis showed that dam removal would increase the carbon 
emissions, cost, and risk of the regional power system. Existing 
natural gas-fired and coal-fired generating plants would be used more 
intensively. In addition, the region would export less energy and 
import more. Carbon emissions would increase 3 million tons per year 
because of the increased use of generating plants that burn fossil 
fuels, and the annual cost of the power system would increase by more 
than $530 million by 2020. Further, because the lower Snake River dams 
serve Bonneville public-utility customers, those utilities and their 
consumers would bear the cost increases. Using a rate-making rule of 
thumb that a $65 million to $80 million cost increase translates into a 
$1 per megawatt-hour increase in Bonneville rates, a $530 million 
increase in Bonneville costs would raise rates by between $6.60 and 
$8.15 per megawatt-hour. Based on Bonneville's priority firm rate (this 
is the rate Bonneville charges its public utility customers) of $28 per 
megawatt-hour in 2009, dam removal would raise that rate 24 percent to 
29 percent.
Hydropower helps back up intermittent wind power
    While the primary resource in the Council's Sixth Power plan is 
energy efficiency, cost-effective renewable resources also play a large 
role, accounting for 17 percent of new resources. This amount is only 
what is required to meet existing renewable energy portfolio standards 
in Oregon, Washington, and Montana (Idaho does not have a renewable 
portfolio standard). Aside from hydropower, wind currently is the 
dominant form of renewable energy in the Northwest, as it is 
competitive in price with new natural gas-fired generation given the 
various incentives and subsidies for wind power.
    Beginning in 1998 with the 25-megawatt Vansycle Ridge project in 
southeastern Washington, commercial wind power has grown to exceed 
4,000 megawatts of nameplate capacity in the Northwest. Wind power now 
is the fourth-largest component of the Northwest power system in terms 
of installed capacity (4,571 megawatts). Current plans call for wind 
power capacity to reach 6,200 megawatts in just a few years.
    Although wind power is four times as expensive as energy 
efficiency, wind power shares some of the important advantages of 
efficiency. It is free of fuel-price risk and carbon-policy risk and 
can be developed in small increments with relatively short lead times. 
However, wind has very little capacity value for the power system. That 
is, it cannot be counted on to meet peak loads because wind turbines do 
not produce power in consistent amounts throughout the day. In 
addition, rather than providing flexibility to adjust to changing 
electricity demand, wind power imposes additional flexibility 
requirements on the power system because of its variability.
    Hydropower is an excellent companion for wind because hydropower 
can be generated continuously and the output of dams can be increased 
or decreased to match the variability of wind. The availability of this 
backup energy from hydropower is one important reason why wind power is 
proliferating in the Northwest. So it is important to continue to 
maintain and improve the efficiency of the hydroelectric system where 
possible.
    This backup role (sometimes called ``balancing'') for hydropower 
also is providing a new source of income for Bonneville and utilities 
that own dams. For Bonneville, this is yielding $30 million to $50 
million in annual revenue that offsets customer rates. Some utilities 
that own hydropower dams are realizing as much value from providing 
backup services as they are from selling surplus power.
Energy efficiency is the highest-priority new resource in the Northwest
    So important is energy efficiency in the Northwest's mix of 
electricity resources that in the Power Act Congress not only made it 
the highest-priority resource but also directed Bonneville to have a 
program to acquire efficiency resources consistent with the Council's 
plan. Importantly, Congress directed the Council to include in its 
power plans all of the energy efficiency that the Council determines is 
cost-effective--not all of the energy efficiency that is available at 
any cost. Nonetheless, in developing its Sixth Power Plan in 2010 the 
Council identified a vast amount of cost-effective energy efficiency, 
nearly 6,000 average megawatts through the year 2029. The Council noted 
the size and value of this resource in the text of the Sixth Plan:
        Across multiple scenarios considered in the development of the 
        plan, one conclusion was constant: the most cost-effective and 
        least risky resource for the region is improved efficiency of 
        electricity use.

        and

        The plan finds enough conservation to be available and cost-
        effective to meet 85 percent of the region's load growth for 
        the next 20 years. If developed aggressively, this 
        conservation, combined with the region's past successful 
        development of energy efficiency could constitute a resource 
        comparable in size to the Northwest federal hydroelectric 
        system. This efficiency resource will complement and protect 
        the Northwest's heritage of clean and affordable power.
    Over the years since the Council was formed, improved energy 
efficiency has met nearly half of the region's growth in energy-service 
demand. If the region's energy savings were added back to the regional 
energy loads, load would have increased by 8,150 average megawatts 
between 1980 and 2008. During that time the region acquired 3,900 
average megawatts of energy efficiency, so that actual loads to be met 
by electricity generation only increased by 4,250 average megawatts. 
Today, in 2011, acquired energy efficiency totals nearly 4,300 average 
megawatts. The Council's power plan is rich with energy efficiency 
because the Power Act requires the Council to meet future demand with 
cost-effective resources, energy efficiency gets highest priority among 
resources in the Act, and the Council has identified literally hundreds 
of potential efficiency improvements that cost less than one-third as 
much as the lowest electricity-cost generation technologies. The 
average cost of the energy efficiency in the Sixth Power Plan in 2009 
was 3.6 cents per kilowatt-hour; the cost of the least-expensive new 
natural gas-fired power plant was 9.2 cents, and wind power in the 
Columbia Basin cost 10.4 cents per kilowatt-hour.
    The availability of so much cost-effective energy efficiency is 
good news for those of us who care about protecting federal hydropower 
investments in the West, as it means that energy efficiency is helping 
to ensure that hydropower will remain the dominant electricity resource 
in our region by reducing the need to build thermal generating plants 
to augment the hydropower supply. Not only is energy efficiency by far 
the least-expensive resource available to the region, it also avoids 
risks of volatile fuel prices and the financial risks associated with 
large-scale resources, and also mitigates the risk of potential carbon-
pricing policies to address climate-change concerns. Improved 
efficiency contributes not only to meeting future energy requirements 
but also provides capacity during peak load periods. The savings from 
efficiency generally follow the hourly shape of energy use, saving more 
energy when more is being used. As a result, efficiency contributes 
more to load reduction during times of peak usage. Or in other words, 
efficiency improvements have capacity value, as well as energy value.
Hydropower affects fish and wildlife, but the effects can be mitigated
    Preserving the capability of the existing hydroelectric system has 
significant value for the region. Mitigating damage to anadromous fish 
from development of the Federal Columbia River Power System has changed 
the operation of the hydroelectric system, reducing its energy 
capability and its flexibility. It is important to mitigate this 
damage, but also to do it in a way that best preserves the value of the 
low-cost, low-carbon hydropower resource. The Council attempts to 
ensure that its fish and wildlife program uses cost-effective 
strategies to improve survival of juvenile and adult anadromous fish 
that migrate past Columbia and Snake river dams to and from the Pacific 
Ocean, including salmon, steelhead, sturgeon, and Pacific lamprey. The 
program also addresses the effects of hydropower on resident fish--
those that do not go to the ocean.
    Importantly, the fish and wildlife program is part of the power 
plan. The Power Act requires the Council to include measures in the 
program to protect, mitigate, and enhance fish and wildlife affected by 
the development, operation, and management of hydropower dams in the 
Columbia River Basin while also assuring the Pacific Northwest an 
adequate, efficient, economical, and reliable power supply through the 
power plan. The Act also directs federal agencies that operate the dams 
and sell their power to undertake those responsibilities in a manner 
that provides equitable treatment for such fish and wildlife with the 
other purposes for which the dams and related facilities are managed 
and operated.
    The program identifies a comprehensive set of interrelated fish and 
wildlife problems and responsive strategies. State and federal fish and 
wildlife agencies, Indian tribes, and others propose projects to the 
Council to address the problems and implement the strategies. All 
project proposals are reviewed by the Council's Independent Scientific 
Review Panel, which submits its reviews to the Council. The Council 
then makes project-funding recommendations to Bonneville.
    Mainstem hydropower dam operations and fish-passage improvements 
are addressed in the program with strategies that aim to optimize the 
survival of focal species. These efforts include re-establishing 
natural river processes to the extent feasible and consistent with the 
Council's responsibilities in the Power Act. The program also aims to 
rebuild healthy, naturally producing fish and wildlife populations by 
protecting, mitigating, and restoring habitats and the biological 
systems within them.
    This has resulted in operational changes at the dams since the 
Council was created. Because of the Power Act, and more specifically 
because of the Endangered Species Act listings of more than a dozen 
species of salmon and steelhead in the Columbia River Basin since the 
early 1990s, hydropower generation has been reduced by about 1,100 
average-megawatts. This primarily is due to legal requirements to spill 
water over dams to aid downstream juvenile fish migration during the 
spring and summer months.
    The fish and wildlife program includes strategies to improve 
passage survival for migratory fish at the dams. I believe these 
measures, in combination with improvements in fish habitat and the 
careful use of artificial production, are helping to boost the number 
of adult fish returning from the ocean to spawn. In the last ten years 
or so we have seen big increases in some runs, particularly some 
species of Chinook and sockeye salmon. Especially since 1999, adult 
salmon and steelhead counts at Bonneville Dam have been averaging much 
higher than any comparable period since the dam was completed and fish 
counting began in 1938.
    Snake River sockeye, the first Columbia River Basin salmon species 
listed for protection under the Endangered Species Act (in 1991), have 
demonstrated a strong response to a captive broodstock program and 
favorable ocean conditions over the last decade. The number of these 
fish returning to spawn and counted at Lower Granite Dam has been 
higher in recent years than any time since the 1950s. As well, juvenile 
salmon and steelhead passage survival at the dams also has been 
improving in recent years due to factors such as spill, system bypass 
improvements, and in-river improvements such as predator control.
    Finally, fish spawning and rearing habitat is being improved under 
the Council's fish and wildlife program. From 2005 to 2010, for 
example, 1,435 miles of instream and streamside habitat were improved 
and 1,527 miles of habitat were opened to spawning by the removal of 
passage barriers.
Conclusion: Hydropower and energy efficiency: Critical to a low-cost, 
        low-risk power supply
    The Pacific Northwest power system is faced with significant 
uncertainties about the direction and form of climate-change policy, 
future fuel prices, salmon recovery actions, economic growth, and 
integrating rapidly growing amounts of variable wind generation. The 
Council's resource strategy for the Sixth Power Plan provides guidance 
for Bonneville and the region's electric utilities on choices that will 
help meet the region's growing electricity needs while also reducing 
the risk associated with uncertain future conditions.
    Hydropower is the most important source of electricity in the 
Northwest, not only providing low-cost, carbon-free energy on a 
consistent basis but recently providing critical backup for the 
increasing amount of carbon-free wind power in the region. By 
continuing to add energy efficiency to the power supply, the region 
will preserve and enhance the flexibility of hydropower to meet demand 
while also providing low-cost backup services for increasing amounts of 
renewable energy.
                                 ______
                                 
    Mr. McClintock. Thank you for your testimony. For the final 
testimony of the day I would like to yield to Mr. Gosar to make 
the introduction.
    Dr. Gosar. Thank you, Mr. Chairman.
    First of all, I would like to welcome my fellow Arizonan up 
here to Washington. Now if he can take some of this rain back 
to Arizona, we would love it. Principally he has served as a 
consultant primarily for the State Legislature throughout the 
state for numerous water and electrical districts, but more 
importantly, primarily for the Maricopa-Stanfield District, Mr. 
Grant Ward.
    Thank you very much.

 STATEMENT OF GRANT WARD, WATER AND POWER CONSULTANT, MARICOPA-
        STANFIELD IRRIGATION DISTRICT, MARICOPA, ARIZONA

    Mr. Ward. Thank you, Representative Gosar. I appreciate 
that.
    Chairman McClintock and Ranking Member Napolitano, Members 
of the Committee, my name is Grant Ward and I served from 1995 
to 2008 as the General Manager of the Maricopa-Stanfield 
Irrigation and Drainage District, and since then have been 
serving as their water and power consultant. MSID was created 
in the late 1960s and includes 87,000 acres of irrigated 
farmland located in western Pinal County of Arizona.
    I would first like to address my remarks to the title of 
this hearing by discussing the hydropower produced at the Glen 
Canyon Dam. When one looks at the issue of protecting Federal 
investments, it should be noted that while Glen Canyon Dam has 
the capacity to produce 1,361 megawatts, the capacity has been 
reduced by approximately one-third. This means that instead of 
having the availability of 1.361 megawatts there is only about 
900 megawatts available. Based on whether the capacity of the 
dam is for a wet or a dry year, the loss is in the range of 200 
megawatts to 400 megawatts which is equivalent to providing 
enough electricity for 175,000 to 250,000 residential 
customers.
    Utilities still have to make up that loss by buying 
supplemental electricity to provide to their customers and that 
most often is generated in the form of coal, oil, or natural 
gas. What that means is that instead of having clean renewable 
energy in the from of hydropower a carbon footprint is created 
equaling approximately 1.63 billion pounds of carbon annually. 
We would ask for a more reasonable approach to the use of the 
full capacity of Glen Canyon Dam.
    We recognize there has to be a balance between the economy 
and the environment, but believe that the operation of Glen 
Canyon Dam is not the ultimate cause of the environmental 
concerns.
    Second, I would like to discuss the opportunity for the 
construction of low head hydro units for the purpose of 
generating power both Federally owned and private canal 
systems. My experience and understanding comes from the efforts 
to construct a hydropower unit for our canal system. Our 
district began looking into this capacity of installing such 
units in early 2009.
    We first reviewed our canals to determine the amount of 
drop at our gates and turnouts, and the average flow of water 
that would go over that structure for the year. We found that 
we have a possibility of constructing 14 separate low hydro 
units at a minimum. The largest output on any individual drop 
structure was determined to be approximately 300 kilowatts to 
350 kilowatts. Combining all of the units together we found 
that the total amount of electricity that could be produced 
equaled approximately 2,200 kilowatts which would provide 
electricity to power 550 to 1,100 residential homes.
    Our struggle over the last two plus years has been trying 
to determine the requirements of the Bureau of Reclamation. 
Briefly, our struggles can be summed up in the following four 
points:
    Reclamation rules of ownership, exactly how that is 
qualified, and we have struggled in getting some of the 
direction from Reclamation as well as understanding where we 
should go. As a result of owner, under ownership you are 
required to have a lease of power privilege agreement. Exactly 
how does that apply to a canal system such as ours? Under the 
environmental assessment being required if it is a Bureau-owned 
system, if the canal was built in the last several years and 
was required to have an EA at that time, is it necessary to go 
through the complete process again if all the new work will be 
within the original right-of-ways?
    And finally FERC, Federal Energy Regulation Commission, 
most hydro units in our canals would produce hydropower of less 
than 1.5 megawatts, yet we are still required to go to FERC for 
an exemption permit. If it is the exemption and there are rules 
that say how it should be exempted, we believe that it raises 
the question of why having to apply for a permit to get an 
exemption if we already meet those standards.
    These four items together can be very costly and very time 
consuming, and being able to be successful in building systems.
    As a final note, during our two plus years of determining 
our eligibility to either work through Reclamation or paying 
our own costs, we have found Reclamation sincerely interested 
in getting low head hydro systems off the ground and developing 
this type of renewable energy. However the concern we have is 
the time delay that has taken place to obtain answers, and 
sometimes the different answers from different departments or 
locations.
    We would make a suggestion that as interested as 
Reclamation is in going forward with low head hydro systems 
they put any and all resources that are working on these 
systems in one office for all requests, all questions, all 
opportunities, and when someone or some entity shows any desire 
to look into low head hydro systems their call is immediately 
forwarded to that one office for any and all answers and 
direction.
    I thank you for the opportunity to testify.
    [The prepared statement of Mr. Ward follows:]

       Statement of Grant R. Ward, Water and Power Consultant to 
           Maricopa-Stanfield Irrigation & Drainage District

    My name is Grant Ward and I served from 1995 to 2008 as the General 
Manager of the Maricopa-Stanfield Irrigation & Drainage District 
(MSIDD), and since then have been serving as their Water and Power 
consultant. MSIDD was created in the late 1960s and includes 87,000 
acres of irrigated farmland, located in western Pinal County of 
Arizona. It was formed primarily to take Colorado River water from the 
Central Arizona Project (CAP) system, when it became available, by 
connecting with the CAP's Tucson aqueduct and delivering the water 
through more than 250 miles of concrete-lined canals, laterals, 
pipelines, pumping plants and related works. The system is also used to 
deliver groundwater operated with pumps powered by electricity from 
Hoover Dam, Glen Canyon Dam, and Parker-Davis Dam, as well as 
supplemental purchased power, all provided by its sister district, 
Electrical District No. 3, Pinal County.
    I would first like to address my remarks to the title of this 
hearing by discussing the Hydropower produced at the Glen Canyon Dam. 
When one looks at the issue of protecting federal investments, it 
should be noted that while Glen Canyon Dam has the capacity to produce 
1,361 mw (equivalent to producing power of up to 1,320,000 residential 
customers), the capacity has been reduced by approximately 1/3 based on 
a Record of Decision issued October 8, 1996, Operation of Glen Canyon 
Dam Final Environmental Impact Statement. This means that instead of 
having the availability of 1,361 mw (name plate number), there is only 
about 900 mw available. Based on whether the capacity of the dam is for 
a wet year or a dry year the loss is in a range of 200mw to 400mw, 
which is equivalent to providing enough electricity for 175,000 to 
250,000 residential customers. Utilities still have to make up that 
loss by buying supplemental electricity to provide to their customers, 
and that most often is generated in the form of coal, oil or natural 
gas. What that means is that instead of having clean renewable energy 
in the form of hydropower, a carbon footprint is created equaling 1,341 
pounds per mwh, or 1.63 billion pounds of carbon annually.
    We would ask for a more reasonable approach to the use of the full 
capacity at Glen Canyon Dam. We recognize there has to be balance 
between the economy and the environment, but believe that the operation 
of Glen Canyon Dam is not the ultimate cause of the environmental 
concerns.
    Second, I would like to discuss the potential opportunity for the 
construction of low head hydro power units for the purpose of 
generating power in both federally owned (Bureau of Reclamation) and 
private canal systems. My experience and understanding comes from the 
efforts to construct a hydro power unit for our canal system. Our 
district began looking into the possibility of installing such units in 
early 2009. We first reviewed our canals to determine the amount of 
drop (the actual footage from one level of the canal down to the next 
level) at our gates and turnouts and the average flow of water that 
would go over that structure for the year. We found that we have a 
possibility of constructing 14, as a minimum, (up to 17) separate low 
head hydro units along various drops and canal turnouts. The largest 
output on a drop structure was determined to be approximately 300kws to 
350kws. Using the more conservative number that is enough electricity 
to power approximately 100 residential customers. When we reviewed the 
numbers for the installation of possible low head hydro units we found 
that the total amount of electricity that could be produced equaled 
approximately 2,200kws (further study would be needed on some of the 
proposed systems to determine cost/benefit ratios), which could provide 
electricity to power 550 to 1100 residential homes.
    Our struggle over the last 2 plus years has been trying to 
determine the requirements of the Bureau of Reclamation (the canals are 
federally owned, although our district operates and maintains the 
entire system serving the district). Briefly our ``struggles'' can be 
summed up in the following four points:
        1.  Reclamation rules of ownership--if Reclamation is involved 
        in providing any funding for a hydro project, they will own all 
        improvements to the facility (meaning the hydro unit). But if 
        the canal is fully operated and maintained by the district, the 
        debt for the original construction has basically been paid off, 
        and the District is willing to pay 100% for the new 
        construction, must Reclamation still have ownership of the low 
        head hydro facility?
        2.  Under ownership requirements of Reclamation, all must 
        comply with the issuing of a Lease of Power Purchase agreement, 
        which requires Reclamation to give a Federal Register Notice 
        allowing companies to bid, and Reclamation awards the bid to 
        the successful bidder, even if the district is constructing the 
        unit either by itself or through a contractor that has been 
        approved by the district board under their bidding regulations. 
        Lease of Power privilege requires an annual fee. We are not 
        sure what that fee will be but have been told it could be 1-
        3mils/kwh, or could be 5% of the annual revenue.
        3.  Environmental Assessment will be required. If the canal was 
        built in the last 20 years (the system is fully cement lined) 
        and was required to have an EA at that time, is it necessary to 
        go through the complete process again if all the new work will 
        be within the original rights-of-way?
        4.  Reclamation has indicated that if the canal is a federally 
        owned canal, and the original legislation (or contract) 
        creating the canal system was also approved for power 
        development, the District would not be required to have a FERC 
        permit. However, when districts either don't have that clause 
        in their contract, or if they are private canals, they would 
        have to face going to FERC for an ``exemption'' permit. Most of 
        these drop structures will produce hydropower of less than 
        1.5mw, which I understand falls below FERC's regulations. In 
        any event, they have to obtain an exemption permit which, when 
        one Arizona private district located on the west side of 
        Phoenix had to obtain an exemption permit (for 12kw), they had 
        to spend $40,000.00 (including pro-bono work by a consultant), 
        and it took 8-9 months to obtain the permit.
    As a final note, during our 2 plus years of determining our 
eligibility to either work through Reclamation (funding) or paying our 
own costs, we have found Reclamation sincerely interested in getting 
low head hydro systems off the ground and developing this type of 
renewable energy. We have met with the Commissioner's, office, the 
Denver office, the Phoenix Area office, as well as the Power Manager's 
office. However, the concern we have is the time delay that has taken 
place to obtain answers (approximately 30 emails as well as several 
face to face meetings), and sometimes the different answers from 
different departments or locations. To their credit they have been 
trying to obtain the correct answers between departments, but that has 
added to delays (I can't help but feel that the review of most hydro 
projects are being appraised using rules that primarily apply to dams 
that presently have no hydro plants, not irrigation canals). We would 
make a suggestion that as interested as Reclamation is in going forward 
with low head hydro systems, they put any and all resources that are 
working on these systems in one office--for all requests, questions, 
opportunities--and when someone or some entity shows any desire to look 
into low head hydro systems, their call is immediately forwarded to 
that one office for any and all answers and direction.
    I wish to thank the subcommittee for this opportunity to present 
our concerns to you and hereby submit this testimony for your review 
and consideration.
                                 ______
                                 
    Mr. McClintock. Thank you all very much for your testimony 
and for your presence here today. At this point we will begin 
questions of witnesses. To allow all of our Members to 
participate and to ensure that we can hear from all of our 
witnesses, Members will be limited to five minutes for 
questions, although if Members have additional questions we can 
have additional rounds, and Members can also submit questions 
for the hearing record.
    After the Ranking Member and I pose our questions, I will 
then recognize Members alternatively on both sides of the aisle 
in order of their appearance here today, and I will now begin 
by recognizing myself for five minutes.
    First, I would like to correct the misimpression that 
somehow the agreement to tear down the four dams on the Klamath 
was the result of a local consensus. Quite the contrary. There 
has been at least one voter referendum in Siskiyou County in 
which voters overwhelmingly opposed the agreement. There have 
been several elections on both sides of the state line that 
were decisively settled in favor of the opponents of the 
agreement, and the Siskiyou County Board of Supervisors has 
formally called for the agreement's reversal.
    I would like to begin with Mr. Corwin regarding the 
proposal for the destruction of the Snake River Dams. Who 
exactly is proposing this and at what stage is the proposal?
    Mr. Corwin. Thank you, Mr. Chairman.
    As far as the actual parties operating the system, all of 
the relevant Federal parties, all of the ratepayer groups, the 
states, all of those folks who were listed before on the 
biological opinion, none of them are proposing destruction of 
those dams.
    Mr. McClintock. Who is proposing it?
    Mr. Corwin. In years past it tended to be some of the 
advocacy groups, you know, that had proposed that, so some of 
the fish advocacy groups and others.
    Mr. McClintock. Are any of them here today?
    Mr. Corwin. Yes, the American Rivers is part of that 
coalition.
    Mr. McClintock. At the invitation of the Minority Party, I 
would stress.
    Mr. Corwin. Yes.
    Mr. McClintock. What would be the replacement cost of this 
proposal? What is the cost of destroying those dams and what is 
the value of the dams themselves that we would be destroying? 
Any ballpark estimates?
    Mr. Corwin. You know, when you total it all up it is in the 
billions and we can provide the reports that have been done in 
the past. Frankly, it is not under--you know, it hasn't been 
updated for awhile because we have been trying to move forward 
with a real solution.
    Mr. McClintock. OK. Could I ask each of your power 
providers to give me an estimate of the percentage of the 
electricity bills that their consumers are paying right now 
because of environmental and other governmental regulations and 
litigation?
    Mr. Corwin. Yes.
    Mr. McClintock. Start with you, Mr. Corwin.
    Mr. Corwin. Yes, certainly. Like I said, just for fish and 
wildlife the wholesale electricity bill is 30 percent. On that 
you could probably add a few percent more for other 
constraints. On your question before, too, we do have--just the 
power replacement portion for those Snake River Dams, and this 
is in Mr. Karier's testimony as well, it is like he said, about 
a half a billion dollars, and you are looking at rate 
increases----
    Mr. McClintock. OK, I would just like to----
    Mr. Corwin.--25 percent.
    Mr. McClintock.--know on behalf of the consumers how much 
of their electricity bill is going to meet all of these 
demands. Mr. Morgan, any ideas for your folks?
    Mr. Morgan. Yes, sir. I have to clarify something. Gunnison 
County Electric is the second smallest cooperative in the State 
of Colorado, and we do not directly purchase power from anyone 
except under a purchase power agreement, wholesale power 
agreement with TriState Generation and Transmission. So all the 
Federal hydropower is purchased by TriState, and their whole 
blended portfolio of energy, about 18 percent is regulation.
    Mr. McClintock. Mr. Simmons.
    Mr. Simmons. I am not sure that is an easy question to 
answer, and the reason for that is a lot of these costs are 
embedded in our wholesale rates and it is hard to find out 
exactly how much money is being spent on the different issues. 
We don't know them.
    Mr. McClintock. Would you say--is 30 percent about right, 
Mr. Corwin's number, about 18 percent Mr. Morgan's?
    Mr. Simmons. I would say we are in the similar ballparks.
    Mr. McClintock. OK, Mr. Gillen.
    Mr. Gillen. For our utility, about 30 percent of our 
wholesale power bill pays for Bonneville's fish and wildlife 
costs. Wholesale power costs are about half.
    Mr. McClintock. Mr. Karier.
    Mr. Karier. Thank you, Mr. Chairman. Those numbers from 
Scott Corwin and Roman Gillen sound about right. The Council 
tracks----
    Mr. McClintock. I am going to have to move on because my 
time is short. Mr. Ward?
    Mr. Ward. Since 1996, the cost economics for Glen Canyon 
Dam's loss of that power if over 500 million. Breaking it out 
probably somewhere in the range of 20 to 25 percent.
    Mr. McClintock. Do the consumers get any notice on any of 
their bills that nearly a third of their electricity prices is 
the cost of these regulations and this litigation?
    Mr. Ward. Not to my knowledge.
    Mr. Gillen. We do not publish a line item on the bill.
    Mr. McClintock. Don't you think they have a right to know 
how much of their electricity bill is going for these purposes?
    Mr. Gillen. Absolutely, and we do print that information in 
many publications that we provide to our members.
    Mr. McClintock. Let me ask if any of the providers who want 
to take a crack at it, what do you see as the future for your 
consumers under existing Federal policy given the current 
litigation and regulatory structure, and what can we do to fix 
it? In 20 seconds or less.
    Mr. Ward. Twenty seconds or less.
    [Laughter.]
    Mr. Ward. I would say that what we are facing right now in 
litigation is reducing the amount in Glen Canyon Dam down to 50 
percent of supply.
    Mr. McClintock. I will try and pick that up in my second 
round of questions. My time is about to expire, and I will 
yield to the Ranking Member for five minutes.
    Mrs. Napolitano. Thank you, sir.
    Mr. Karier, you mentioned the Council's six power plan. 
What role do efficiencies play in preserving hydropower 
production and how much of the projected future demand of the 
Northwest can be met with efficiencies?
    Mr. Karier. Thank you. The plan covers a 20-year period and 
over that 20-year period we expect that we can meet 85 percent 
of the new loads through energy efficiency, and at a cost, 
again, of a fraction of other new generation.
    Mrs. Napolitano. Thank you. Mr. Fahlund, you mentioned on 
page 5 of your testimony that you would hope that the multiple 
Federal agencies work together.
    Mr. Chair, I am introducing into the record an MOU between 
the agencies in December of last year to streamline and 
simplify authorization of small hydro projects. If you wish a 
copy, I would be glad to provide it for you.
    You also mentioned efficiency----
    Mr. McClintock. Without objection.
    Mrs. Napolitano. Thank you. You also mentioned efficiency 
upgrades as one of the simplest. Most cost-effective and lowest 
impact means of increasing hydropower generation, can Congress 
help to incentivize efficiency upgrades at existing facilities 
and how?
    Mr. Fahlund. Yes, Congresswoman. I think Mr. Simmons 
alluded to this briefly, that effectively most of these 
facilities which were sort of built during the last great 
Federal stimulus program were effectively--have effectively not 
been heavily invested, with a few exception, in terms of new 
turbines, new generators, and so these old facilities could be 
upgraded significantly. There are technologies out there that 
can also help enhance fish and wildlife, provide fish and 
wildlife benefits and give an ability to release water and 
generated at various levels and at different times that can be 
beneficial to both the environment and to power production. DOE 
has done a lot of study on this.
    Mrs. Napolitano. Which then leads me to Mr. Simmons. On 
page 2 you indicate that some of the facilities are 45 years or 
older, and a lot has been gone over, the cost of O&M is costing 
more to fund, consequently the ratepayer ends up paying for 
that, I am assuming.
    What is the life expectancy of some of the--especially the 
on that you are with that will demand infrastructure repair, 
infrastructure addition or a replacement of?
    Mr. Simmons. A lot of these facilities are figured at 
basically 100-year lives. So we are halfway through that life 
cycle. Now, rotating equipment, bearings, things like that need 
to be replaced, and a lot of that has been done through 
operations and maintenance. So it is an ongoing item. The real 
problem, I think, is that we need dependable funding from you 
guys to make sure that these things get done.
    Mrs. Napolitano. OK, and that would be at low-cost loans?
    Mr. Simmons. They are your facilities. They are not ours.
    Mrs. Napolitano. But you benefit from them.
    Mr. Simmons. We pay those rates, but they are your 
facilities, and this is a question that probably will come up 
later, but we as customers put up funding for capital 
improvements. We are doing that through basically cash advances 
that we do. I don't know how we can put up more when we do not 
have title to something. You know, if we are going to pay for 
something----
    Mrs. Napolitano. That is an issue that we need to take up 
then.
    Mr. Simmons. You know, pay for something that you guys own, 
how do we get a loan to do that when we don't have title?
    Mrs. Napolitano. OK. Well, that is an issue we should be 
able to look at.
    Again, Mr. Fahlund, you mentioned in your testimony you 
would like to see Federal facilities take a basin-wide approach 
to hydropower. Can you give an example of where it has worked 
in the past and why would this be beneficial from an 
environmental?
    Mr. Fahlund. Yes. One example from the East very quickly is 
the Penobscot River. We reached an agreement with Pennsylvania 
Power & Light, which owns the dams on the Penobscot River, and 
effectively that yielded an agreement that restored habitat, 
access to habitat, and also yielded a net increase in power 
production. That project hasn't been fully implemented just 
yet, but the agreement nonetheless we can see adequate trades 
offs between power and fish and wound up getting an increase in 
both.
    Mrs. Napolitano. Thank you, Mr. Chair. Look forward to the 
second round.
    Mr. McClintock. Next is Ms. Noem.
    Ms. Noem. Thank you, Mr. Chairman, and I have a question 
for Mr. Simmons, I guess. You mentioned in your testimony the 
rising costs of complying with regulations such as the 
Endangered Species Act. And I know you gave us a couple of 
examples of how that directly impacts ratepayers, but there are 
other rules that are costly and time-consuming. Could you 
expand on some of those other rules and the effect that they 
have on electric co-ops? And then specifically, I mean, address 
how consumer rates increase to meet the cost of complying with 
these government regulations because that is truly how they are 
impacted, how the ratepayers are impacted by your 
administrative costs and by the costs that you have because of 
these regulations you are trying to comply with.
    Mr. Simmons. All of the costs for whatever we have to do 
end up in the customers' rates. There is no other place to put 
it. I mean, we are consumer owned. So if one neighbor doesn't 
pay for it, the other neighbor has to, so it all ends up in the 
rates.
    Endangered species is probably the biggest issue that we 
deal with on the river. We have the pallid sturgeon that we 
deal with in the Missouri River, we have the least tern in the 
piping plover. We have been dealing with the tern and the 
plover for 25 years. It is hard to identify what that cost is 
because it has become part of the normal operations.
    Ms. Noem. So you don't have any specifics on how much, what 
percentage of the costs actually would be probably complying 
with regulations or----
    Mr. Simmons. I am not sure we can identify that. We don't 
know most of those costs.
    Ms. Noem. Have you significantly seen those costs rise as 
regulations have risen?
    Mr. Simmons. I would say drought has more of an issue than 
that does by far on us, but they are there.
    Ms. Noem. Are these customers aware that their rate 
increases are related to government regulations and for outside 
influences?
    Mr. Simmons. If I can't tell you how much they are, how 
could they?
    Ms. Noem. But do these recognize that----
    Mr. Simmons. I don't think so.
    Ms. Noem. They don't. OK, thank you very much. I appreciate 
it. I yield back the balance of my time.
    Mr. McClintock. Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman.
    To the Power Counsel witness, Mr. Karier, you have an 
incredibly ambitious plan. I mean, 85 percent of new load or 
new demand can be met through efficiency and conservation, is 
that correct?
    Mr. Karier. That is correct.
    Mr. DeFazio. Anybody else in the United States of America 
come anywhere near those kind of numbers in any other region?
    Mr. Karier. I think there are a few areas. California does 
a lot with conservation, but I think we are among the leaders 
in the country in this.
    Mr. DeFazio. Right. So what if we just said, well, how 
about you come up with another 3,500 megawatts of short-term 
power, or 1,110 megawatts of annual power, just dump that on 
top of what you are already doing, could you easily meet that 
through more conservation?
    Mr. Karier. The difficulty there is that we invest and plan 
to invest in all cost-effective conservation, and the fact that 
we lose some generation doesn't necessarily change that 
calculation. So it is not easy to draw on that.
    Mr. DeFazio. So for those who say simplistically to me, 
well, we will take those dams out which don't block the prime 
spawning habitat which are blocked by the high dams up--private 
high dams up, further up the Snake which no one is challenging 
their re-licensure, no prominent national environmental groups, 
none that I am aware of.
    Second, so we are going to lose that power, we are going to 
increase costs by $530 million to ratepayers, and we are going 
to increase west-wide 5.2 million tons of CO2 for 
replacement power. Now, why would we do that, and does that 
include the costs of loss of navigation in terms of carbon? 
Does that include the cost of dam removal?
    Mr. Karier. No, we are looking only at the cost of 
replacing the generation and capacity that those dams----
    Mr. DeFazio. What about the 10 years of barging that the 
Clinton Administration determined would be necessary because of 
the massive siltation with the removal of the dams, what would 
that cost, and what would that do to the survival of salmon? 
That seems like three generations of all the smolts being 
barged. I thought barging was a problem. If barging is a 
problem, why would we want to barge all the smolts for 10 
years?
    Mr. Karier. Those are good questions, Congressman.
    Mr. DeFazio. Has the Council addressed those things?
    Mr. Karier. We haven't. There was a Federal study by the 
Army Corps of Engineers.
    Mr. DeFazio. Yes, I read it actually. I think very few 
others have.
    Mr. Karier. And I think they did a good job of documenting 
all of those additional costs, and the costs were significant 
in all those.
    Mr. DeFazio. Yes, I think we were looking probably--in 
today's dollars we would be talking $2-$3 billion for dam 
removal. Then we had the loss of navigation. Then, of course, 
in those days we didn't think about--people say, oh, just put 
all the wheat on the trains, and I have talked to the railroads 
and they say, we don't have anymore capacity, and guess what? 
The Columbia River is there so we can't expand the line, so I 
guess they go on trucks. No, maybe they will go in a different 
direction or who knows what will happen, down the Mississippi 
through the Panama Canal, I don't know how it is going to get 
there. Well, thank you.
    We have another big problem which is private wind 
generation, contracted very much to California, which does have 
ambitious goals on meeting their needs for alternate 
transportation, and Mr. Gillen, and I appreciate him traveling 
all the way here, I know how difficult it is, addressed this. 
Do you want to just address briefly the concern of our public 
ratepayers or customers of Bonneville Power Administration 
subsidizing private wind power which is being sold under 
contract to Southern California in high wind, high water years?
    Mr. Gillen. Yes, that is a concern. We want to make sure 
that the capacity of the Federal hydro system is compensated to 
firm those resources. Another concern is that as those projects 
that benefit folks outside the region are built, that takes 
capacity away from the Federal system that we are going to need 
in the Northwest as we continue to meet growing loads as well. 
So there is just a variety of, I think, hidden things that we 
are concerned about, we are watching very closely.
    Mr. DeFazio. Wouldn't it be fair to say it would be just 
sort of a general principle that private wind power entering 
into contracts with Southern California utilities should pay 
the costs that they add to the system, whether it is on 
transmission or loss of capacity or whatever costs they create?
    Mr. Gillen. I think that would be a fair policy to 
establish, yes.
    Mr. DeFazio. Yes, we don't want to be subsidizing a private 
industry, right?
    Mr. Gillen. That would not make sense.
    Mr. DeFazio. Yes. OK, thank you. Thank you, Mr. Chairman.
    Mr. McClintock. If the gentleman will yield for a moment I 
will just point out we now are requiring 30 percent of our 
electricity to be generated from these facilities.
    Mr. DeFazio. Right.
    Mr. McClintock. We stopped building new major facilities 
decades ago.
    Mr. DeFazio. Right.
    Mr. McClintock. Do you expect us to pay the cost of these 
policies?
    Mr. DeFazio. I know that might be unreasonable, Mr. 
Chairman.
    Mr. McClintock. Next is Mr. Gosar.
    Dr. Gosar. Thank you very much.
    For all of you, you know, with regulation comes litigation 
and it is sometimes inseparable. Can each of you tell me if 
there are any sources of litigation that are awarded through 
the Equal Access of Justice Funds to challenge hydropower 
projects? Let us start on the left side and work our way down.
    Mr. Corwin. You know, I would need to check into that and 
get back to you. I am not certain.
    Dr. Gosar. I would love to know that.
    Mr. Corwin. Yes.
    Dr. Gosar. And the amounts. Yes, sir?
    Mr. Morgan. That would be a question you would have to 
address to our power supplier, and so I do not know the answer.
    Mr. Simmons. Ditto. I don't know the answer to that. We 
could find out.
    Dr. Gosar. We would like that. You, sir?
    Mr. Gillen. I don't have an answer but we could find out.
    Dr. Gosar. I want it.
    Mr. Ward. And we would do the same.
    Dr. Gosar. Mr. Ward?
    Mr. Ward. Congressman, we have seen numbers. To be honest 
with you I can't tell you exactly what they are and we will 
send to you a copy of what we have seen for those numbers.
    Dr. Gosar. Part of why I bring that up is there is a 
symbiotic relationship between that funding and the regulatory 
bodies because they work synonymously in court, so I would like 
to see those numbers.
    Mr. Ward. We will do that.
    Dr. Gosar. Mr. Ward, as you know, we are going to be more 
specific about this, is that we have had in the Endangered 
Species Act, and we have reduced some of the power at the Glen 
Canyon Dam in regard to the humpback chub. When we reduce the 
flow of, or reduce--increase the flow of water out of the Glen 
Canyon Dam, for that five-year study did we actually see an 
increase in the number of humpback chubs or did we see 
something contradictory?
    Mr. Ward. We did not. The only thing that we have done 
sediment removal or sediment replacement, we have done high 
flow, low flow, medium range. The only thing that has shown an 
increase in the humpback chub has been from mechanical 
harvesting of trout, which are non-native, which started around 
2000 for about three years, and the humpback chub numbers 
started coming back up.
    Dr. Gosar. And Mr. Ward, I know that there are two 
different kinds of chubs here. How do we discern those two 
different kind of chubs?
    Mr. Ward. I cannot answer that. I will have to----
    Dr. Gosar. Actually a dorsal fin with seven ribs versus six 
ribs, if I am not mistaken. That is the only identifiable 
aspect.
    Mr. Ward. That sounds good.
    Dr. Gosar. Yes. Now, if we were to take that off of line 
here and I know I am very specific about this because Arizona 
has got a problem, we have deteriorating transmission lines, it 
is very hard to add on to, some of the worst in the United 
States. How do we replace that? Is there some way of replacing 
this lost power?
    Mr. Ward. Through the transmission lines?
    Dr. Gosar. Well, I mean the loss of this power from----
    Mr. Ward. From Glen Canyon?
    Dr. Gosar.--this hydroelectric output?
    Mr. Ward. It would require some new construction and those 
costs, of course, would be part of each of the utilities that 
participate. There are some utilities looking to replace 
transmission in the southern part of the state, but it would be 
through a cost factor, and that would increase the volume 
supply available for hydro or other power.
    Dr. Gosar. Now, wouldn't you say that Arizona is one of the 
prime areas for solar, and a pretty prime spot for wind? Can 
they make up the difference?
    Mr. Ward. Under the current structure of our hydro dams 
that have been there for many years, all of the power is 
allotted. You would have to remove some of that allotment from 
customers to make up the base load for supplying solar and 
wind.
    Dr. Gosar. But both those are temperamental, are they not?
    Mr. Ward. They are temperamental. Sometimes the wind blows, 
sometimes the sun--the sun shines most of the time, I will say 
that.
    Dr. Gosar. Yes.
    Mr. Ward. But it doesn't shine at night.
    Dr. Gosar. That is why I put them in that order.
    Well, thank you, Chairman. I will yield back my time.
    Mr. McClintock. Mr. Labrador.
    Mr. Labrador. Thank you, Mr. Chairman.
    Is it Mr. Fahlund?
    Mr. Fahlund. Fahlund.
    Mr. Labrador. Fahlund. OK. Your organization has focused on 
reaching the four lower Snake River Dams for salmon passage, 
but if it is true that only four of the listed runs past these 
dams, what do you suggest for the other nine species listed in 
the Columbia River Basin?
    Mr. Fahlund. Well, we have been working on restoration of 
the Columbia River and Snake River Basin stocks really for 
about the past 25 years pretty intensively. No, no, I take that 
back--20 years. Our Northwest office is about to celebrate the 
anniversary. And so we have worked actually with several of the 
public utility districts, Grant County, Chelan County, on the 
re-licensing of their facilities, trying to improve passage 
flows and so forth which have met with some success, I believe. 
We certainly looked at some of the other Federal facilities in 
ways in which they can reduce impacts as well, so that is by no 
means is the Snake River dam removal the only game in town as 
far as the full panoply of stocks, but the Snake stocks, the 
science is pretty clear that the best way to achieve 
harvestable runs once again to benefit fishing communities 
along the coast is to remove the lower four Snake River Dams 
and that is why we have advanced that position.
    Mr. Labrador. What about Grand Coulee, would you advocate 
taking that out along with 6,800 megawatts of renewable energy 
contribution and its flood control and irrigation roles?
    Mr. Fahlund. No, by no means.
    Mr. Labrador. What is your view on endangered coastal runs 
that do not pass any dams?
    Mr. Fahlund. Well, endangered coastal runs suffer from a 
different host of issues, habitat being probably the main one 
of those. Certainly historical logging and mining operations 
had impacts. It really depends on the stock and the run in 
particular, so those are areas where my organization hasn't 
particularly focused. We have limited resources. Other groups 
have.
    Mr. Labrador. So wouldn't that be just as true with respect 
to habitat with the Columbia River species?
    Mr. Fahlund. The Columbian snake species do have habitat 
issues. That is why in fact we are trying to get most of the 
Snake River stocks up into the upper basin because the best 
habitat available through upstream passage is actually up in 
Idaho in the Salmon River Basin in particular and the clear 
water.
    Mr. Labrador. I understand that American Rivers is in 
current litigation against the Federal Government on Federal 
dam operations in the Pacific Northwest. As American Rivers 
received Federal grant money?
    Mr. Fahlund. We receive Federal grant money from various 
sources, yes.
    Mr. Labrador. And how much is that?
    Mr. Fahlund. I couldn't tell you exactly off the top of my 
head. I think it may be in the disclosure statement, or I would 
be happy to provide you with that information.
    Mr. Labrador. I really would like to see for the record the 
grant money and also the Equal Access to Justice Act that was 
just referred to money received over the last decade.
    Mr. Fahlund. Yes, I don't believe we have received any 
Equal Justice Act money. We don't employ litigators so that 
money goes elsewhere.
    Mr. Labrador. OK. At least the grant money, I would like to 
see that.
    Mr. Fahlund. Yes, by all means.
    Mr. Labrador. OK. For all panelists starting with Mr. 
Corwin, we are right now in a pretty serious reduction mode, 
deficit reduction mode. Tell me a little bit more about why you 
do not think power marking administrations should charge market 
rates for their power as proposed by some?
    Mr. Corwin. Thank you, Representative. Again, we are 
talking today about investments in Federal hydropower projects. 
Those investments are made though by ratepayers. This is all 
ratepayer-funded dollars. It is not Federal money at stake. So 
to the extent you are increasing the rates to try to reduce the 
deficit, you are really just increasing the rates on one part 
of the country here and one set of customers within that part 
of the country. It seems unfair. It is a regional tax. We just 
don't think it makes any sense in the deficit reduction 
scenarios.
    Mr. Labrador. OK. I guess we only have 30 seconds so if one 
more person wanted to respond to that.
    Mr. Gillen. I would agree with Mr. Corwin. Regional burden 
to help the overall Federal budget issues just doesn't seem 
very fair, but as Americans we are concerned about the budget 
issues, too. We just want to see fairness in how that is done.
    Mr. Labrador. Thank you very much.
    Mr. McClintock. Mr. Tipton.
    Mr. Tipton. Thank you, Mr. Chairman, and I would like to 
ask Mr. Morgan. Given the reduction in hydropower generation at 
the Glen Canyon Dam unit due to environmental compliance, just 
how critical has the Aspinall Unit become meeting peak 
electrical demand during the summer months and other seasons of 
high electrical usage?
    Mr. Morgan. It has become very critical. As you know, 
peaking generation, especially in the summer months, is very 
expensive, and being able to utilize the Aspinall Unit for 
peaking generation allows our power supplier to utilize 
inexpensive peaking generation that would otherwise probably 
come from natural gas, which has a significantly higher cost 
and has emissions, has, you know, environmental considerations 
as well, so we think it is critical.
    Mr. Tipton. You know, if we didn't have that peaking 
capacity during the times of critical usage during the summer 
months, as you know we are going to have to be buying more 
expensive generation on the market, thus increasing consumer 
rates in a very bad economy, hurting a lot of the citizens, 
particularly in my district where we had better than double-
digit unemployment in, I believe it is 27 of the 29 counties 
that I represent in the State of Colorado.
    What is the practical impact that you really see? How is 
that going to be hitting people at home?
    Mr. Morgan. Well, I mean, with our power supplier having to 
purchase expensive market-based power or generating peaking 
power with high cost ramping evenness for that peak, that cost 
is going to be passed on directly to our consumers, and you are 
correct, Gunnison County is in a bad place right now.
    Mr. Tipton. Right. I think that is something, Mr. Chairman, 
that is incredibly important for us to be able to keep in mind. 
A lot of the decisions that are faced here are impacting real 
people at home, and we have one of the--the cleanest source of 
energy production in the entire country when we are talking 
about hydroelectric power and the importance to our 
communities, and particularly when we get out into the western 
United States, that is the source. So if we want clean energy, 
this is certainly one of the great points.
    Mr. Ward, I would like to maybe have you comment just a 
little bit in terms of some of the impacts, some of the high 
flow that has been coming out of the Grand Canyon Dam.
    Mr. Ward. Part of the problem we have had, Congressman, is 
when those timings may be made under the agreements between the 
environmental community and the utilities there are times of 
the year that those waters are released when they are not doing 
the most advantage to the utilities and the power rates 
peaking, for example.
    If we go to what they would like us to do, which is a low 
flow or level flow, that means it runs the same way all year 
long, but what do you do in the summer with the high 
temperatures or in the winter. So as a result it does impact us 
on how it flows.
    Mr. Tipton. I am incredibly sorry Representative Gosar had 
to go to another meeting here. He is one of the few vets that 
we have, somebody that probably really understands it, but one 
of the purposes of these high flows is to be able to help the 
humpback chub, and he was able to describe it apparently what 
they look like, going downstream from the dam.
    What fish have benefitted most from these high releases?
    Mr. Ward. You know, that is difficult to say. I don't know 
that the humpback chub have been affected either way. The trout 
have probably benefitted. They don't seem to have the same 
problem. High flows a lot of times will create sediment. That 
doesn't seem to bother the trout too much but it seems like the 
humpback chub has a hard time finding their food source and so 
on as a result of sediment in the water.
    Mr. Tipton. Right. Just kind of historical perspective, I 
grew up in the Southwest, you know, before we had some dams, 
McPhee Reservoir in my part of the country, and oftentimes 
those rivers would almost--natural causes almost run dry. What 
happened?
    Mr. Ward. You know, your winter runoff comes in April-May. 
If you don't have dams, that water goes on down to the coast. 
If you have no rain or whatever and you have drought, you don't 
have much rain, and there were times in the early West that 
they could cross the Colorado in the late summer by walking 
across almost.
    Mr. Tipton. Right. I would be kind of curious, and this may 
or may not be in your purview, but does more water, does it 
equal more endangered fish being saved in this case, and is 
water the only mechanism really to be able to same the humpback 
chub?
    Mr. Ward. That is a good question because I don't know that 
can be answered. I don't know that more water is the answer to 
the problem. It is when the water is released, as far as the 
environmental community is concerned, and how they approach it 
and some of the litigation is that it should be released at 
certain times of the year to avoid certain times like spawning 
and so forth, so it just really depends on----
    Mr. Tipton. Do we use fish hatcheries? I apologize, Mr. 
Chairman.
    Mr. McClintock. Yes.
    Mr. Ward. We have in the past. I say ``we'', game and fish 
in Arizona has done that. I do not believe they have had much 
success, and I don't know why in the humpback chub.
    Mr. Tipton. Thank you.
    Mr. McClintock. Mr. Garamendi.
    Mr. Garamendi. I yield to Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman. Mr. Garamendi had a 
phone call he had to make.
    To Mr. Fahlund, you said something I thought was really 
extraordinary, and I have seen some numbers out there that if 
we removed those four dams that we would have an incredibly 
robust coastal fishing area of commercial size for a number of 
species. We are getting 95 percent smolt survival now with 
those four days, which is pretty equivalent to what happens in 
rivers without dams. So what is happening there? How is that 
going to give us this huge coastal fishing area on these 
endangered species that are currently endangered?
    Mr. Fahlund. Well, I think you shouldn't take my word for 
it. I think you should take the American Fishery Society's word 
for it. They are the fish biologist experts.
    Mr. DeFazio. Right, there are biologists on both sides and 
Jane Lubchenco has quite some credentials as I understand, and 
she engaged her own peer review of the biop. and didn't come to 
that same conclusion. Thank you.
    Then have you read the Corps of Engineers report, the one 
that was commissioned during the Clinton-Gore Administration on 
dam removal? Have you read it? It is quite long, about 600 
ages.
    Mr. Fahlund. There were several----
    Mr. DeFazio. Yes, well, the 600-page one that talked about 
the siltation 10 years and barging all the smolt.
    Mr. Fahlund. My staff----
    Mr. DeFazio. About the costs. Well, have you heard, do they 
tell you about those things? If barging is bad and we have a 
problem now with survival, we are going to barge all the smolts 
for 10 years while incurring a $3 billion cost of dam removal 
because of siltation. That would be good for the future of 
these species. What do the biologists say about that?
    I mean, then if barging is that great that we can do it for 
three generations, why don't we just barge them all right now, 
give them a free ride down to the base of the Columbia?
    Mr. Fahlund. I think that is largely what we are depending 
on currently.
    Mr. DeFazio. No, it is not.
    Mr. Fahlund. Spill has been mandated because that has been 
determined to be a preferable option.
    Mr. DeFazio. Right, but we are not barging the largest 
proportion of the smolt. What percent are we barging?
    Mr. Fahlund. I couldn't tell you. I haven't got those 
figures.
    Mr. DeFazio. Yeah, you would have to ask your staff.
    So let us go back to what the Northwest Power Council 
conclusions. Do you contest those conclusions that it would 
cost the ratepayers $530 million on an annual basis if we 
remove those dams to purchase replacement power? The 
replacement power, since they already have the most ambitious 
conservation program and renewable program in the country, 
would have to be done with thermal, regionally would increase 
carbon emissions by 4.4 million tons, West-wide by 5.2 million 
because we would be buying power outside the region and 
shipping it back in because we have lost the capacity, and 
then, of course, the other small details, barging all the 
smolts for 10 years, the loss of navigation which isn't 
included, I don't believe. Did you include that in your carbon 
estimates, loss of navigation?
    Mr. Karier. No we did not.
    Mr. DeFazio. OK, that is another pretty significant factor 
because actually barging is more efficient than rail and rail 
is way more efficient than trucking, and since we can't put all 
that stuff on the rail we are going to probably put them on 
trucks or maybe we are going to send it somewhere else. I don't 
know.
    So anyway, so when you hear all of that you just think we 
should press ahead with dam removal despite the biop, despite 
the conclusions of the Obama Administration on this, and the 
Clinton Administration? We are not talking about the Bush 
Administration here. We are talking about two Democratic 
Administrations that came to the conclusion it would be a 
really stupid idea.
    Mr. Fahlund. Are you asking me?
    Mr. DeFazio. Yes.
    Mr. Fahlund. I think that we need an honest dialogue that 
keeps all options on the table, and we haven't had that ever. 
We have never had a common----
    Mr. DeFazio. Did you see the amendments that--you know, and 
the language that Ms. Lubchenco had put into the biop that said 
should we not meet expectations in terms of these species, that 
indeed we would return to a review of dam removal?
    Mr. Fahlund. Yes, I did.
    Mr. DeFazio. But let us try the biop first, and if it 
doesn't work then we could go back to look at this incredibly 
stupid and impractical idea of removing all the dams?
    Mr. Fahlund. Yes, I have seen that.
    Mr. DeFazio. OK. Think that is pretty good? That puts it on 
the table if we need it, right? Only if we need it.
    Mr. Fahlund. It is on the table if we need it. I suppose 
that is a promise but not a guarantee that is for sure.
    Mr. DeFazio. OK, thank you. Thank you, Mr. Chairman.
    Mr. McClintock. Mr. Garamendi? Mr. Garamendi, you still 
have 20 seconds.
    Mr. Garamendi. I hardly know where to start after I have 
yielded to Mr. DeFazio.
    [Laughter.]
    Mr. McClintock. You have about 10 seconds.
    Mr. Garamendi. I am shuffling my papers quickly.
    Mr. McClintock. I think now the gentleman's time has 
expired, but we will have a bonus round with questions----
    [Laughter.]
    Mr. McClintock.--that will begin right now, and the good 
news is you will be next up after the Ranking Member.
    Mr. Garamendi. I think I will just wait until after the 
Ranking Member and try to figure out where Mr. DeFazio was 
coming from with all of that. So if I could just defer for a 
moment.
    Mr. McClintock. I don't blame you. And I do want to stress 
for the third time that the gentleman from American Rivers is 
the Minorities' guest here today.
    I would like to return to the question that I began my 
questions with, and that is the purpose of this series of 
hearings is to assess our current Federal policies, where they 
are going, and to determine what adjustments we have to make to 
get back to a period of abundance and prosperity, and I would 
like to ask each of the witnesses here today, where are we 
going under current Federal policies and what can we do to fix 
that?
    Mr. Corwin. Thanks, Mr. Chairman. Certainly costs are going 
up. Rates have gone up significantly in the last several years, 
and that is tied to some of these policies.
    Mr. McClintock. Why? Why? Because of Federal policies?
    Mr. Corwin. Yes. Certainly for customers of BPA power fish 
and wildlife costs have escalated over the last 20 years 
enormously. How do you get to that? You need to meet your 
statutory obligations unless you can change the statutes and 
you need to do it more efficiently. Obviously, within a $800 
million fish cost, there are a lot of efficiencies that can 
still be found. Northwest Power and Conservation Council is 
trying----
    Mr. McClintock. And by the way on that point, what are the 
challenges to fish? What are the biggest challenges to fish 
populations?
    Mr. Corwin. You know, they are all throughout the life 
cycle. So this focus on hydropower is--that is where I disagree 
strongly with some of the statements by the gentleman from 
American Rivers. You know, these fish face challenges all 
throughout their life cycle. They are still intentionally 
caught and harvested as well. They face predation by sea lions, 
significant amounts, eating the adults who are the folks coming 
back to spawn.
    Mr. McClintock. Are the predations a greater factor in 
mortality than the Federal hydropower facilities?
    Mr. Corwin. Certainly for adults they are, yes. There is 
almost no issue with adult passage through the Federal 
hydropower system. The adults go right up the river. But almost 
all this focus has been on the juvenile passage downstream. 
Well, there we have also had years where avian predation, birds 
have eaten 10 million or more of the juvenile smolts that we 
are spending all this money to protect trying to get them out 
to the river, so there are a lot of issues. Ocean conditions 
are another big one. You can't control that a lot, that makes 
these populations fluctuate.
    What we would like to see are more efficiencies in 
operations, especially on the spill regime that has been 
mentioned.
    Mr. McClintock. What would you offer as a more cost-
effective ways of dealing with these issues? For example, fish 
hatcheries, predator control, what are your views on that?
    Mr. Corwin. Absolutely more predator control, more 
aggressive regime on that; more efficient fish hatcheries. They 
have made some improvements on those over time. Not spilling 
water over the dams when there aren't fish in the river is a 
good start. We are trying to make steps in that direction. This 
biop makes steps in that direction, but those are just a few 
items.
    Mr. McClintock. Any other thoughts on this subject from the 
providers?
    Mr. Gillen. The region's commitment to the biop, that has 
undergone considerable scrutiny and again at considerable cost 
to our members. We are in support of that because we think that 
is the best chance to address the needs of these endangered 
fish.
    Mr. Ward. I believe one other thing is, and it was 
mentioned a moment ago, was predator control, and with Glen 
Canyon Dam you are between a rock and a hard spot. Trout being 
the non-native fish are enjoying their lunch on the humpback, 
but on the same token the fish below that dam----
    Mr. McClintock. And your customers are paying 30 percent 
more on their electricity bills in order to feed the trout. Is 
that essentially what is going on?
    Mr. Ward. I think that is one way of saying it.
    Mr. McClintock. This is insane.
    Mr. Ward. And I will say that the trout fishery below the 
dam is one of the greatest in the world, so they are caught 
between what do they do. Do they get rid of them? Do they--you 
know, it is a difficult decision.
    Mr. McClintock. OK. Mr. Corwin, American Rivers testified 
for a basin scale coordination on hydropower. Would this impose 
a new review requirements on existing hydropower and keep new 
regulations on top of old regulations?
    Mr. Corwin. You know, I am not sure exactly what kind of 
coordination he was referring to so I would have to look at 
that. As far as the power system goes, the Federal Columbia 
River Power System is a model of coordination. To have 31 dams 
all generating, to have this system working the way it does to 
meet the needs of the Northwest is incredible right now.
    Mr. McClintock. Mr. Karier, just a quick yes or no on this. 
As I understand it, when we add wind and solar to the grid 
because it is an integrated grid and because wind and solar are 
intermittent for every megawatt that we add of one of these 
intermittent sources--wind or solar--we have to have an 
additional megawatt of reliable backup, is that correct?
    Mr. Karier. Yes.
    Mr. McClintock. All right, thank you. Ranking Member.
    Mrs. Napolitano. Thank you, Mr. Chair, and I would like to 
submit for the record, Mr. Chair, the number of cases pending 
litigation as of January 2011 at the Bureau of Reclamation for 
the Mid-Pacific Region. There are 20 of them. Five are 
environmental suits, the rest are cities, ditches, alliances, 
et cetera, et cetera. Just for the record one is closed, so 
that leaves four out of 20, and I would like to submit that for 
the record.
    Mr. McClintock. Without objection.
    Mrs. Napolitano. Second, Mr. Karier, you indicate that 
almost 500 million annual is spent on environmental mitigation. 
BPA has on the books the building of four nuclear plants. Am I 
correct?
    Mr. Karier. Washington Public Power Supply System from the 
plants that weren't built.
    Mrs. Napolitano. Correct.
    Mr. Karier. Yes.
    Mrs. Napolitano. Three were not built. How much are you 
paying on that debt? How much is BPA paying? I am sorry.
    Mr. Karier. I would have to get back to you, but that is 
one of the largest cost items for Bonneville Power is still 
paying the interest on that debt.
    Mrs. Napolitano. Almost a billion dollars annually is my 
estimation. How does that compare to the mitigation of the 
environmental issues that we have?
    Mr. Karier. The estimates that we have received from 
Bonneville about the annual costs for the fish and wildlife 
program is about $800 million a year--or $750-$800 million--and 
that includes the cost of the foregone power from spilling 
water for fish, so it includes some of those operations costs 
as well as the out-of-pocket costs, so that is the range. We 
report on that annually to the Governors of the Northwest.
    Mrs. Napolitano. I understand, but my concern is that we 
are comparing some of these costs, and you are bearing costs 
for something that was never built.
    Mr. Karier. That is correct. That, again, is one of the 
largest line item costs for Bonneville is----
    Mrs. Napolitano. Thank you.
    Mr. Karier.--paying the interest on that investment.
    Mrs. Napolitano. Mr. Morgan, you mentioned in your 
testimony you need help in developing more hydropower 
resources, and are you aware the Memorandum of Understanding 
between FERC and the State of Colorado signed last August to 
simplify procedures authorizing the development of small-scale 
hydropower projects at existing facilities in Colorado, and 
have you taken advantage of the program?
    Mr. Morgan. No, I was not aware of that.
    Mrs. Napolitano. We would like to furnish the information 
to you, sir.
    Mr. Morgan. OK.
    Mrs. Napolitano. Because we do have it available.
    And it is my understanding, Mr. Morgan, that a change to 
the draft EIS to reflect that Black Canyon's Federally reserved 
water rights and that Reclamation has committed to delivering 
the park's water as well as its obligations as part of the 
Aspinall Unit.
    How can we jump to a conclusion and say that Reclamation 
isn't protecting hydropower before the filed EIS is even 
released?
    Mr. Morgan. Well, the movement forward is to continue to 
restrict that. That is the direction that it is moving in.
    Mrs. Napolitano. But it is not final.
    Mr. Morgan. You are correct, it is not final.
    Mrs. Napolitano. And how are we assuming that?
    Mr. Morgan. That just appears to be the direction that it 
is moving in.
    Mrs. Napolitano. OK. Mr. Fahlund, in your testimony you 
mentioned an analysis by FERC which found that since Congress 
passed laws in the mid-1980s to encourage environmental 
improvements overall generating capacity has actually increased 
by 4.1 percent. Could you elaborate on how generation would 
increase while mitigating the environmental impacts?
    Mr. Fahlund. That is simply because many of the efforts 
within those re-licensing proceedings resulted in agreements 
were environmental interests supported additions of capacity 
where facilities were under capacity. We also supported 
modifications to operations that would have facilitated 
increases in generation, not just capacity, so it had intended 
to net out positive.
    Mrs. Napolitano. Thank you. Mr. Chair, I have more 
questions for the record but I would like to leave my remaining 
57 seconds to Mr. Garamendi, then he can have his five.
    Mr. McClintock. Then Mr. Labrador can have his.
    Mrs. Napolitano. Yes, I know but----
    Mr. Garamendi. The Chairman spoke to the issue of abundance 
and prosperity, good, but an abundance of what and prosperity 
for whom, and I will go through a series of questions about 
those, and also I note that we are looking at river segments 
that basically cover the entire West, and therefore the issues 
are remarkable different or dramatically different on each 
river, and each segment of the river, and so one size is 
clearly not appropriate, and it certainly doesn't fit all, so I 
will come to those questions. Thank you, Mr. Chairman.
    Mr. McClintock. Mr. Labrador.
    Mr. Labrador. Thank you, Mr. Chairman.
    Mr. Corwin, we have spent $13 billion of taxpayer money on 
salmon restoration. Can you explain greater detail where this 
funding is being spent?
    Mr. Corwin. Certainly. Thank you, Representative. And on 
that to compare costs, to follow up on a question a little 
earlier there, I think that number was wrong as far as the debt 
costs remaining on the nuclear plants. The total payment of 
Bonneville to the Federal Treasury is almost a billion dollars 
a year, but that includes a lot of other pieces of debt 
structure in there, so their entire power revenue requirement 
is $2.5 billion a year, so they don't have a $1 billion payment 
on just the nuclear plant out of that, but there is still a 
remaining amount. It is going to be paid off in several years.
    The pieces of the fish budget break down into an integrated 
program that is reviewed by the Power Council and they do a 
good job, but there several hundred projects involved with 
that. That is about $250 million a year. The Power Council's 
oversight costs themselves are another several million. The 
Fish and Wildlife Service has a piece of about 30 million. The 
Corps of Engineers has a reimbursement piece of about 40 
million, a little bit more than that, and then you have this 
enormous operations piece from power replacement purchases or 
foregone revenues that is about $460 million a year, and then 
you have capital on the fish projects which is about $150 
million a year, so that is kind of how it breaks down. More and 
more of that has become related to ESA needs, the biological 
opinion needs as opposed to general mitigation in the region 
under Northwest Power Act.
    Mr. Labrador. Do you think this money is being spent as 
efficiently as possible?
    Mr. Corwin. No. It has gotten better over the years, but we 
have a long way to go, and we need to keep our noses to the 
grindstone as customers and work with the Power Council and 
Bonneville and other agencies to make sure that is as efficient 
as possible.
    Mr. Labrador. Aside from the dollars spent to replace power 
loss through spill, what are some of the operational impact to 
losing this generation?
    Mr. Corwin. Yes. I mean, just the spill portion and flow 
that we were talking about before, the capacity, the 
flexibility that you lose is, as was mentioned earlier, that is 
the same flexibility people want to use to try to integrate new 
resources, these variable resources that drop off suddenly in 
an hour. Well, hydro can follow those--back up those resources 
hour to hour, so you lose that capability. You also lose 
important voltage support for reliability of the system.
    We have gotten better about that over time, but in 1996, 
the West Coast power outage put four million people into a 
blackout, and that was mainly because of really increasing 
temperatures and loads, and the lines sagged into some trees, 
and then McNary Dam went down. Well, part of what they needed 
was more voltage support and when you have all that project 
spilling, you don't have that. It is also one of the arguments 
that came to fore when they were looking at drawing down the 
John Day Reservoir; that if you didn't have that resource there 
how would you back up those power needs when you really need 
them in those situations.
    Mr. Labrador. Yes, American Rivers has said that the Snake 
River dams are incompatible with healthy salmon runs. What is 
the current rate of fish passage at the Snake River Dams?
    Mr. Corwin. Yes, as we were saying earlier, it is about 96 
percent, and certainly for adults it is the same as you would 
have with a natural river. There are other issues that get 
pulled up in that debate, but the proof is in the pudding on 
the returns that we are seeing now. The Chinook, especially is 
really showing good returns, and specific to the Snake River, 
those returns have improved, and the trend is upwards.
    Now, they go up and down according to ocean conditions as 
well, but the passage improvements that you can measure through 
the hydropower system are evident.
    Mr. Labrador. OK, thank you.
    Mr.--is it Karier?
    Mr. Karier. Karier, yes.
    Mr. Labrador. We heard some say that without the four Lower 
Snake Dams in place the region could replace that energy and 
capacity with energy efficiency and renewable energy. Is that 
true?
    Mr. Karier. Well, that has been one part of this argument. 
The Council's analysis looked at how the region would 
practically do that. It is more complicated than just energy 
because of the capacity value of the dams. The dams can meet 
peak loads. Wind power, for instance, cannot do that for the 
most part.
    So if those dams were removed and the region was faced with 
replacing that, the Council's analysis shows a combination of 
primarily less exports, more imports into the region, an 
increased use of the existing coal plants and the natural gas 
plants, and expansion of natural gas plants in the Northwest, a 
small increment of conservation beyond what we already are 
getting primarily because we are getting all cost-effective 
conservation in our current plan.
    Mr. Labrador. Great. Thank you.
    Mr. Karier. So that would be the portfolio that would be 
required to replace that.
    Mr. Labrador. Thank you. Thank you, Mr. Chairman.
    Mr. McClintock. Mr. Garamendi.
    Mr. Garamendi. Thank you, Mr. Chairman.
    Abundance and prosperity for whom and what? Clearly the 
issue of abundance of the natural species in the river is of 
great concern. If you are talking salmon, you are also 
seriously talking about prosperity for those who rely upon the 
salmon for their income. But we really have to deal with the 
balancing here. It is not one way or the other. It is a 
balancing situation.
    The testimony that I heard a few moments ago that it is 
about predation, listen, it is about dams on the river. 
Predation has always been there in one for or another, and will 
always be there, and the ocean does change from time to time, 
but clearly there is no doubt that the dams on the river are 
the principal issue.
    The question for us is given that there are dams on the 
river how do we provide abundance in its many forms: abundance 
of electrical power, abundance of water when needed, where 
needed, and also abundance of fish, many species, and this is 
true on everyone of the river here, and I will note once again 
that each of these river segments is quite different from the 
other so we are dealing with different circumstances.
    Some dams can be removed without great harm to electrical 
power or others. Other dams, no way, no how, it isn't going to 
happen, so let us get real here and kind of focus on what each 
of the rivers need and each specific stem of the river. It has 
been a long time since I have dealt with the Columbia, in fact, 
it was 1998 that I left the Department of the Interior and the 
work that I was doing on the Columbia, so I am not up to date, 
and I have missed most of this hearing. I apologize for that, 
but I will come up to speed on it.
    Going forward what I would like to see us do, Mr. Chairman, 
is to really figure out how best to deal with a very complex 
problem to achieve all of the abundance that we need: abundance 
of fish, salmon, other species, as well as the abundance of 
power. It is not going to be easily done. We have added to the 
mix in the last decade--wind, solar--both of which as you point 
out, Mr. Chairman, are intermittent, and we have the electrical 
power. The integration of these sources of power is of utmost 
importance to all of us because all are clean energy, and it 
may require us to think differently than we have in the past 
about the integration, about the resources, and the timing of 
those resources.
    I also note, and I guess I am just making a speech here 
without many questions, but so be it. That was Mr. Boehner's 
word, wasn't it, ``so be it''. Anyway, how can we do these 
thing? How can we have an abundance of fish?
    Trucking, Mr. DeFazio's purpose about moving beyond the 
dams. A lot of the testimony here that I have heard, 96 percent 
return compared to what? Downstream, the smolt going 
downstream, the salmon issues.
    Mr. Chairman, you are on an issue here that if we think 
about this in a very holistic way, taking into account the 
complexities that exist, I think we can make some progress 
here. We are not going to remove the dams on the Columbia or 
the Snake for that matter. It isn't going to happen, at least 
in our lifetimes. So given that how can we improve the 
fisheries on an extraordinary river system? That is our 
challenge. We ought to focus on those things that are possible.
    I know the Klamath--you and I may disagree with that, Mr. 
Chairman--but on the Klamath we ought to complete the study on 
the Klamath about removing the dams. It hasn't yet been 
completed. We don't have all the information in. It may make a 
lot of sense to do so. It may not. We come to this with our own 
initial prejudices. I suspect yours, Mr. Chairman, is don't 
remove them. I know mine is to remove them, but let us get on 
with it and let us find out what the details are in the 
Klamath.
    With regard to the Colorado, yes, the fish have been eating 
each other for a long time, but we want to make sure that they 
are all there to eat each other in the future. Numbers have 
been tossed around here about power losses and the like and 
about costs and the like, but we are really kind of playing a 
political game without getting down to the real details that we 
need to understand. I thank the Ranking Member for bringing out 
some of those points, so let us get past the rhetoric, and let 
us recognize that we have a very complex problem in which we 
ought to be maximizing the abundance in every form, and making 
sure that there is prosperity for all who have now historically 
and in the future depended on these rivers. That ought to be 
our goal. These are complex issues, very tough issues. But if 
we go at it with goodwill, I think we can make some progress.
    Mr. Chairman, I thank you for the hearing, and I look 
forward to working with you.
    Mr. McClintock. Thank you. That concludes our rounds of 
questions. I want to thank all of our witnesses for their 
valuable testimony. Members of the Subcommittee may have 
additional questions or comments for witnesses. We would ask 
that you respond to those in writing, and I also would like 
again to ask all of you for your input on what changes you 
believe need to be made in current Federal policy to achieve 
those objectives of abundance and prosperity that we have 
outlined. The hearing record will be open for 10 business days 
to receive these responses.
    If there is no further business to be brought before the 
Committee, without objection, the Committee stands adjourned.
    [Whereupon, at 11:56 a.m., the Subcommittee was adjourned.]

                                 
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