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Commentaries and editorials

Council Delays Decision on How to Cut Fish/Wildlife Projects

by Barry Espenson
Columbia Basin Bulletin - January 17, 2003

Saying it doesn't have enough information to judge the task at hand, the Northwest Power and Conservation Council this week delayed a decision about how it would pare back its fish and wildlife program to fit under a $139 million cap.

The task is large by any estimation. The most recent Bonneville Power Administration estimates are that the agency will accrue $173 million in expense during the fiscal year that ends Sept. 30 if no cuts are made in the Council program. That means, if those figures hold, $34 million or nearly 20 percent of the commitments would have to be cut or deferred. The federal power marketing agency funds the program as mitigation for impacts to fish and wildlife caused by construction and operation of the federal Columbia/Snake river hydropower system.

As of Thursday the Council felt the information it had from BPA was inadequate to make allocation decisions. An emergency meeting is planned Jan. 27 to both establish principles for prioritizing the 600-plus program contracts and deciding how the $139 million would be allocated across the Columbia River Basin.

Council staff said that about $21 million might have to come off the top -- $9.25 million for Bonneville's overhead, $7.5 million for subbasin planning, $1 million for ISAB/ISRP support, $750,000 for data management and $2.5 million for water marketing that is called for the federal salmon recovery strategy. That would leave$118 million to allocate across the 11 Columbia Basin "provinces" designated by the Council.

The Council's fish and wildlife director, Doug Marker, offered a suggestion that that balance be prorated according to historical spending -- specifically 2001. Larger capital expenditures that might have occurred in that year would be omitted to leave a truer picture of the actual non-capital "expenses" that year in each of the provinces. But the Council was not ready Thursday to commit to a specific allocation plan. Neither were they ready to assign the painstaking and delicate task of prioritizing all projects in the program to provincial work groups composed of fish and wildlife managers and others.

The deadline looms. BPA CEO Steve Wright has asked the Council, in consultation with the region's fish and wildlife managers, to produce its recommendations by Feb. 21. The Columbia Basin Fish and Wildlife Authority's executive director, Rod Sando, on Thursday advised the Council to ask BPA for a 30-day extension.

"I don't think you can do this in a few weeks," Sando said of the task of organizing and assembling work groups and poring over and comparing the hundreds of projects. The Council, as of Thursday, was divided as to whether or not to ask for an extension. Some, such as Oregon's Melinda Eden, Idaho's Judi Danielson and Tom Karier questioned whether the task could be done properly in that time frame.

"There seems to be a lot of information that will become available in the next two to four weeks that would help us," Eden said, adding that tardiness should be preferred over potentially bad decisions.

The Council is awaiting final judgment from BPA whether some $17 million to $20 million in planned 2002 land acquisition or conservation easement purchases could be capitalized, meaning they would shift from the expense to the capital side of the ledger. The BPA rate case assumed an average of $139 million per year in accrued expense and $36 million per year for capital expense, such as hatchery construction, that is paid off over time.

The capital side has been underspent -- $7 million was spent last year and a $13 million outlay is expected in 2003. The Council's budget cutting task would literally be halved if the land purchases were capitalized, but BPA has indicated that that is not likely to happen in 2003. Such policy language would have to be included in a rate case, such as the safety net cost recovery adjustment clause process that the agency may initiate this year.

The Council also wants to find out what other projects among those being reviewed would be considered as capital projects. Marker estimated there are as many as $3 million to $5 million in such projects. Also needed is a better definition of the funding to meet BPA's "critical needs" for meeting requirements of the National Marine Fisheries Service's 2000 biological opinion 2003 and 2005 check-ins.

Marker said that an extension of the deadline would allow for "much more meaningful" consultation with CBFWA's members -- tribal, state and federal fish and wildlife managers -- and others. In most cases, tribal councils would need to judge the resulting priority lists. And if that tribal process did not come full circle, "the Council would be taking on itself the full responsibility" for the decisions, Marker said.

BPA's Therese Lamb said the agency would prefer to think of the Feb. 21 deadline as fixed. The fiscal year is slipping away, and with it the chance to cut costs.

"You will never see a bigger test of our ability," to bring regional consensus, said then-Chairman Larry Cassidy. He passed the gavel at meeting's end to Danielson.

"It will test our mettle."

There are by BPA's estimate $139 million in commitments alone for ongoing fish and wildlife projects during 2003. The agency's estimated accrual list for the fiscal year includes $12 million (up from the month-old estimate in the Council staff's calculations) for its fish and wildlife overhead, nearly $10 million for approved but uncontracted new projects, $2.65 million for new projects from five recently completed provincial reviews and $5 million in new projects from the as-yet uncompleted mainstem/systemwide provincial review.

BPA Fish and Wildlife Division Director Sarah McNary said those accrual estimates will be forwarded to the fish and wildlife managers and other project sponsors to be "ground truthed" -- verified to assess whether the estimates are accurate.

The BPA estimate also includes an estimate that $4 million will be needed to fill "gaps" in the research, monitoring and evaluation structure that must be built to satisfy requirements of the 2000 BiOp regarding hydro operations' effects on federal protected salmon and steelhead stocks.

Wright on Dec. 10 told the Council that the program's actual accruals (bills that must paid) were expected to shoot far past the average annual expenditure the agency had planned for in setting wholesale power rates. In large part the cause is an unusually large number of bills came due from commitments made in previous years. And while the fish and wildlife bills carried forward, the money to pay for them did not.

Meanwhile the federal agency finds itself in a tender financial situation which it says has eaten up virtually all of its reserves and could result in as much as a $1.2 billion loss for the 2002-2006 rate if costs aren't cut and/or rates aren't raised. An unhealthy mix of drought, volatile market conditions and overcommitment of power resources has thrown the BPA into the tailspin. The prospect of another drier-than-normal winter this year dampens hydro prospects. It means that the agency will have less surplus energy to sell to augment its revenue stream.

The jury's still out on the rate increase but the agency has launched an aggressive cost cutting effort. And while fish and wildlife program -- always at or under budget in any year -- did not cause the problem, it is part of the cure. Wright said the agency cannot spend more than $139 million in any of the remaining years of the rate case.

He asked the Council to take the lead in finding ways to cut, defer and/or cancel fish and wildlife contractual obligations being considered for new projects and for project renewals. The prioritization must include "projects needed to meet the requirements of the various biological opinions that apply to Bonneville, in particular the 2003 and 2005 check-ins for the 2000 Federal Columbia River Power System Biological Opinion and to preserve previous important investments of the Fish and Wildlife Program," Wright said.

Related Pages:
BPA: www.bpa.gov/indexmain.shtml
NWPPC: www.nwcouncil.org/
CBFWA: www.cbfwa.org/Default.htm


Barry Espenson
Council Delays Decision on How to Cut Fish/Wildlife Projects
Columbia Basin Bulletin, January 17, 2003

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