The Impact of Environmental Regulations on Hydropower Generation
February 15, 2001
By Kent Holsinger
Assistant Director
Colorado Department of Natural Resources

Introduction

The value of electrical power is immeasurable. It heats our homes, offices and schools, lights our way in the dark, delivers us the news, and allows us to produce goods and services. The United States, at least until recently, was the envy of the world when it came to electric power generation. The cost of our power was 37% lower than in Europe, 49 percent lower than in Germany, and 73 percent lower than in Japan. What happened?

Population migration to the West, increasing reliance on computers, the Internet, and cellular phones, among other things, has propelled the demand for energy to epic proportions. Meanwhile, increased regulation and environmental demands on water in the West have created an alchemy of issues and a poignant contradiction: Consumers want more power at affordable prices; Environmentalists want fewer dams and more restrictions on existing dams.

Hydroelectric Power

The Western Area Power Administration (Western) markets and delivers hydroelectric power from 55 dams in the West, the vast majority of which are owned and operated by the Bureau of Reclamation (the Bureau). The Bureau is the nation's second largest hydroelectric producer. Hydropower, has been, and continues to be, critical to the nation and the West.

In 1941 Franklin Delano Roosevelt tasked his countrymen to build an arsenal of ships, boats and planes capable of defending the United States and the world from Hitler's advancing forces. The build up required huge quantities of aluminum, which, in turn, required staggering amounts of energy. Roosevelt's goal was achieved because of nearly unlimited, cheap hydropower production in the Northwest.

Today, hydroelectric power produces roughly 13 percent of the nation's generating capacity (nuclear power accounts for 14 percent and fossil fuels generate 62 percent). But hydropower has many advantages over other power sources. Not only are hydroelectric plants more reliable and durable than other sources, they are inexpensive to operate, clean and extraordinarily efficient.

Hydroelectric plants operate at 85 to 90 percent efficiency--more than twice that of fossil-fueled plants. Water storage in reservoirs serves as the best means to store large amounts of electricity. Need more power? Release some water. Simple as that. No mining; no transportation costs period. Hydroelectric plants are also flexible in meeting peak power demands. Their ability to start quickly and adjust to load changes make hydroelectric dams invaluable during times of high energy demand.

The Western Area Power Administration depends on hydroelectric power to serve millions of consumers in 15 western states (Arizona, California, Colorado, Iowa, Kansas, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Texas, Utah and Wyoming). In 1999, Western generated $886 million in revenues and repaid an estimated $149 million of investments in federal water projects. Power marketing administrations, such as Western and the Bonneville Power Administration, (Bonneville) were built to market and deliver affordable power to rural communities while paying the debt service on federal water projects. They were doing just that until the U.S. Fish and Wildlife Service started demanding flows for endangered fish over and above irrigation and power production needs.

Environmental Restrictions on Hydroelectric Power

There are environmental impacts when rivers are harnessed to produce power: siltation and barriers to fish migration are among the foremost, but at what cost do we forego power production? In recent years, the U.S. Fish and Wildlife Service and the National Marine Fisheries Service have been directing the Bureau to run hydroelectric plants not for power generation, but for environmental needs including species listed under the Endangered Species Act.

In the Colorado River Basin, when the U.S. Fish and Wildlife Service demands flows from the Bureau in the spring to mimic natural flooding this depletes critical summer supplies and releases stored water when power usage and demand is lowest. With low reservoir levels, power marketing administrations are then poorly equipped to deal with peak power demands during hot and dry summers.

Take last summer: its dry as dust, the temperature soars and so does the demand for energy. But the Aspinall Unit, a series of three hydro-producing reservoirs in Colorado, had no water for peaking power. To make matters worse, the U.S. Fish and Wildlife Service forced the Bureau to decrease reservoir releases to minimum levels so the federal government could study the effects of drought on fish. Western, in turn, had to purchase power on the open market (when costs were 3.6 times higher than just one year before). In sum, the U.S. Fish and Wildlife Service caused Western to release water when there was no market for power and to purchase power when the market was at its highest. The potential cost in lost power generation has yet to be quantified. Cold comfort for consumers.

Impacts

Several federal hydroelectric dams in the Upper Basin of the Colorado River are constrained by Endangered Species Act restrictions. In 1996, the Department of Interior issued a Record of Decision that slashed capacity at Glen Canyon by 456 megawatts for environmental reasons primarily fish flows and sand bars. One megawatt is roughly the energy required to supply one thousand homes. The Environmental Impact Statement alone cost $104 million to complete. Today, reoperations cost an estimated $100 million annually! Moreover, in the Spring and Summer of 2000, a six-month test operation for additional endangered fish benefits was conducted at a cost of $3.5 million. The cost to replace six months of lost electricity was between $16 and $24 million.

Other examples abound. Since 1991, Flaming Gorge Dam has been subject to ESA requirements at an estimated cost of $7.2 million annually (based on today's prices). Operations of the Navajo hydroelectric plant in New Mexico have also been hindered. The Bureau is now doing an EIS on Navajo reoperations that should outline some of these problems.

Things are even worse in the Pacific Northwest. The US Army Corps of Engineers and the Bureau own and operate 29 hydro projects on the Columbia and Snake Rivers in the Northwest. Those dams generate the least expensive electricity in the country. Unlike the Colorado River Basin, peak demands in the Northwest occur due to heating demand in the winter. The Bonneville Power Administration markets and distributes power from these federal dams. Power revenues pay for the operation of the projects, debt service to repay initial investments in the system, and flow and habitat improvements for endangered fish.

In a recent report, the Northwest Power Pool, a seven-state coalition of power interests in the Pacific Northwest, warned that cold snaps in the region will trigger blackouts should dry conditions continue. Reservoir storage in key hydroelectric facilities is only 63 percent of average in part because of dry hydrology and releases for fish last summer. Historically, BPA managed the system to supply power throughout the duration of a four year drought. Since the application of the Endangered Species Act, the system can only supply power for a ten month drought.

While salmon runs are at all time highs, the National Marine Fisheries Service (NMFS) has listed up to 40 distinct subspecies under the Endangered Species Act. These fish have different spawning runs and different needs at different times. Some biologists protest on the grounds Northwest salmon should be lumped into much broader categories as salmon have been in the Northeastern United States. Overall, salmon numbers are very high in most of the Northwest. But federal biologists are unwavering. In fact, they advocate killing, yes killing, up to one-third of the hatchery raised salmon that have successfully migrated above the Bonneville dam because they are not the "right" fish.

Federal biologists also insist on hugely controversial flow programs for the salmon and steelhead. Fish flows affect power generation in two ways: forced spills and flow augmentation. Last week, electricity prices reached over thirty times the price Bonneville sells to its customers. The difference in prices cost the agency $50 million over four days in January. Should the National Marine Fisheries Service continue to run the hydroelectric plants for fish, Bonneville will have to purchase $1.3 billion to $2.6 billion in electricity to meet its power supply obligations. Should dry conditions persist, those numbers could increase by a factor of ten. Such a devastating blow could hurl an already uneasy economy into the abyss. Some utilities are already teetering on financial ruin.

Bonneville has declared a power emergency to release water slated for 12 spring and summer runs of Columbia Basin salmon to generate electricity. But there is no lasting authority to disregard fish flows and without significant precipitation even that won't be enough.

Conclusion

In today's computer-driven society, dependable supplies of electrical power are more important than ever. Power marketing administrations are already purchasing power on the open market and passing along outlandish price increases to consumers. The cost for Endangered Species Act and environmental protections is breathtaking. Yet, some environmental groups that clamor to remove dams for fish habitat have been strangely quiet amidst the recent crisis. Could they be contemplating whether or not to expend the energy on their e-mail networks?

Should the U.S. Fish and Wildlife Service and the National Marine Fisheries Service continue to force power marketing administrations to operate for the benefit of fish rather than power, the West could be cast into darkness and the nation propelled into a bleak economic future. Truly, balancing economic benefits with environmental protection is a monumental task. But when the stakes are this high, policy makers must question how best to achieve that balance. Only through sound science and truly collaborative efforts may stakeholders and federal decision makers achieve these goals. If they do, the power marketing administrations will continue generating so that supply is strong and prices are low and all utilities (and consumers) will benefit.

Kent Holsinger is the Assistant Director for water issues at the Colorado Department of Natural Resources. He can be reached at (303) 866-3311.