Columbia River Treaty – only paying for the actual benefits

You may have likely heard that Grant, Chelan and Douglas PUDs jointly filed a lawsuit in June against the federal government over our collective contribution of hydroelectric energy and capacity we must send to Canada per the Columbia River Treaty.

Implemented in 1964, the Columbia River Treaty between the United States and Canada was established to facilitate the joint development of power generation and flood control in the Columbia River Basin. It has many elements and directly affects our ability to maximize the benefits of the hydroelectric generation of the Priest Rapids Project — Wanapum and Priest Rapids dams — for our local and regional customers.

The decision to sue didn’t come lightly. We took this action only after years of pressing the Bonneville Power Administration to tell us how they calculate the amount of hydropower we must send to Canada from our dams to satisfy a Treaty obligation called the “Canadian Entitlement.”

The Canadian Entitlement requires the United States to compensate Canada for its role in constructing and operating Canadian dams and reservoirs to store large volumes of spring runoff, allowing for gradual release of that water downstream into the United States, to help prevent flooding and enhance hydropower generation for Columbia River dams in the United States.

This compensation is provided to Canada as valuable hydropower energy and capacity. According to calculations from hydropower industry experts, we believe U.S. federal and PUD dams on the Columbia River have been sending electricity benefits that are valued at 90% higher than the value we receive through coordinated operations and increased generation. This results in a collective annual overpayment to Canada of U.S. hydropower output worth approximately $500 million. This overpayment means we have fewer resources for our own customers at a time when demand for electricity, especially here in Grant County, is forecasted to increase substantially.

We have always been willing to pay our fair share of the improved downstream benefits outlined in the Canadian Entitlement, but only for the actual benefits received.

As the only owners and operators of non-federally controlled hydropower facilities on the Columbia River, Grant, Chelan and Douglas PUDs (collectively known as the Mid-Columbia PUDs) had contracts with Bonneville Power Administration to jointly contribute 27.5% of the total Canadian Entitlement. However, in mid-September these contracts expired and so did our requirement to provide the federal agency with that portion of the Canadian Entitlement.

Nearly four months ago, a new Agreement in Principle for the Columbia River Treaty was announced. While this Agreement reduces the overall amount of hydropower energy and capacity the United States collectively provides under the Canadian Entitlement, our analysis indicates that the United States would still be significantly overpaying based on the downstream benefits our hydropower projects would receive. The new Agreement in Principle also extends the obligation of the United States through 2044.

For seven years we have asked for a fair and transparent process to determine an appropriate factual and legal basis for allocating Canadian Entitlement returns from the Mid-Columbia PUDs after our contracts with Bonneville expired. We are still waiting, which is why we have used our option to ask the court to help settle the question of an appropriate payment for the downstream benefits we receive through the Treaty.

We believe the lawsuit is necessary to best address the energy needs of our community and the customers we serve — particularly given that so much valuable hydropower generation is on the line. Energy challenges remain as critical as ever, and our need for transparency regarding the Canadian Entitlement is imperative.