That Dam Bill

[April 23rd, 2008]

Blowing up a dam is fun. Figuring out who should pay and how much? Not so much fun.

When Portland General Electric removed the Marmot Dam on the Sandy River last September, the explosion marked the end of a complicated 23-party negotiation dating back a decade to restore the Sandy’s free flow to the Pacific.

It would have been the end, except ratepayer groups and the Oregon Public Utility Commission now want PGE to provide a better explanation of a related land donation that came out of its customers’ pockets.

Next month, the PUC will consider PGE’s request to donate 729 acres of prime land around the former dam site, which lies about 40 miles east of Portland, to a conservation group. That donation provides some valuable green cover for PGE as the Sierra Club sues the utility over emissions at its coal-fired plant in Boardman, Oregon’s only such facility.

Under terms negotiated years ago, PGE will give the Sandy River land—which the utility says has an appraised value of about $7 million—to the Portland-based Western Rivers Conservancy. The conservancy will package the land with other nearby property and sell the combination to the federal Bureau of Land Management. With the proceeds, it will buy more riparian land to create a salmon-friendly corridor along the Sandy.

Here’s the rub: PGE customers bought the land with their monthly utility payments. If PGE sold the land directly to the BLM for cash, customers would get a credit from that sale on their bills. They get no financial benefit from the giveaway.

The utility says there’s a good reason for that. Gail Baker, a PGE spokeswoman, says the land donation is part of a bigger transaction.

In effect, Baker says, the other 22 parties to the transaction (which include the Federal Energy Regulatory Commission and the state of Oregon) agreed that PGE would give away the land in order to preserve riparian habitat. In exchange, the enviros and regulators signing the agreement would agree to PGE’s preferred method of taking out the dam and mitigating the damage to fish habitat downstream.

Baker says the utility’s plan saved about $9 million from the original proposal because blowing up the dam and allowing nature to flush the sediment was that much cheaper than tearing down the dam gradually and removing built-up sediment mechanically.

That means even though ratepayers get nothing for their land, they are kept whole and maybe even slightly better off. “The option we chose was riskier but saved ratepayers money,” Baker says.

But staff at the PUC, which must approve any transfer of utility-owned land, wants more details of the savings PGE is claiming.

“We’re asking PGE to demonstrate that there is a savings to customers,” says Bryan Conway, the PUC’s lead staffer on the issue. “That’s been difficult for PGE to do.”

Customer groups such as the Citizens’ Utility Board and Industrial Customers of Northwest Utilities also want more information about those savings.

“We don’t know what the ultimate facts are, but we have concerns any time we see millions of dollars of ratepayer assets being given away, even if it’s to a well-intentioned environmental group,” says Melinda Davison, a lawyer for ICNU.

Conway expects the PUC will hold a settlement conference to resolve the issue by early June.