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Multimillion-dollar question looms for Klamath
By TAM MOORE Oregon Staff Writer

KLAMATH FALLS, Ore. – The lowest “reasonable” power rates for Klamath Project irrigation in 1956 were 0.6 cents a kilowatt-hour, 0.75 cents Kwh on lands within the project but not served by irrigation diversions from U.S. Bureau of Reclamation.

As the 50-year-old power contract based on reasonable rates expires in 2006, PacifiCorp says current “reasonable” rates are 5.5 cents per Kwh in Oregon, 6 cents in California, plus a “demand” charge based on duration of peak electrical load.

The original Klamath irrigation rate contract was issued in 1917, part of the federal government’s construction of the Link River Dam, which diverted water to Klamath Project Canals. California Oregon Power Co., PacifiCorp’s predecessor, granted the low rate in exchange for being able to operate the dam to the benefit of its downstream hydroelectric facilities.

Last week in Klamath Falls, a crowd of ranchers and farmers came to a lunch where PacifiCorp was supposed to tell them what to expect if local irrigators jump from the 1956 contract rate monumented as policy in the state-federal Klamath River Basin Compact to current agricultural schedules charged non-project irrigators in California and Oregon.

Trouble was, Sally LaBriere, the power company’s regional community manager, couldn’t talk specifics.

“Obviously the ink isn’t dry on anything,” she said.

While LaBriere spoke, a negotiating team from Klamath Water Users Association flew home from a week of lobbying in Washington, D.C. They want the Federal Energy Regulating Commission to mandate lowest reasonable power rates for project irrigators when PacifiCorp’s Klamath hydroelectric licenses come up for renewal in 2006.

John Nichols, vice chairman of the KWUA Power Committee, said it’s important to get the word out that irrigators paid for the water storage facilities that make operation of PacifiCorp’s dams feasible. He said he worries that the power issue could become so large it ends up in court, with FERC repeatedly extending the old license while parties litigate.

PacifiCorp has long argued that since the federal government stepped in, ordering flows based on protecting fish listed under the Endangered Species Act, the company gets little benefit from project flows.

How large are the stakes? PacifiCorp’s Jon Coney said by phone from Portland that 1,300 individual customers have project irrigation rates. Estimates on the impact of moving to state utility commission rates are estimated at between $1.6 and $10 million a year, depending on who’s doing the math.

“Just say it’s in the millions of dollars,” said Coney.

Oregon’s Public Utility Commission estimates that, based on actual usage during the 2003 growing season, pump operators on the Oregon side of the border face a $6.5 million a year power bill, instead of the $650,000 they paid.

For Bonanza rancher Louis Randall, that kind of math is easy. Randall is a cattle and hay producer. He knows that running up his irrigation pumping bill by nine times the current rate doesn’t pencil out.

“Maybe if you are growing something more valuable than grass,” he said, “but if all you can grow is grass and that depends on the price of cattle. ... The prices are pretty good now, but we all know they don’t last forever.”

Chatting before lunch, Randall predicted that hundreds of Klamath Project farmers who did federal cost-share overhauls of irrigation equipment will find they can’t afford to run the pumps for their new pressurized systems.

Rodney Todd, an Oregon State University extension agent nearing retirement, is doing his best to arm producers with analytical tools that may help them figure out how to get ready for some sort of dramatic hike in power rates. Todd is an agronomy adviser, but his undergraduate training was in water engineering, and he came to the Klamath Basin to work for an irrigation district before joining extension.

Todd didn’t consult with Randall, but he reached the same conclusion: Returning to gravity flows and flood irrigation may be the way some operations survive.

What Todd can say for sure is that “with higher energy costs there is going to be chaos” in the Klamath Basin.

LaBriere said in an interview that one of the big reasons she can’t predict costs for each irrigator is that PacifiCorp doesn’t have the meters installed that allow measuring demand rates. Change-out of meters will come in 2005, allowing some sharpening of costs.

Todd hopes to have a simple computer program that will let farmers play with options.

Nichols said KWUA looks first to the licensing process and to political action that as in 1956 and 1957 monumented low rates for project irrigators.

At PacifiCorp headquarters, Coney had a bottom-line observation. At present the difference between Klamath irrigation rates and the actual cost of power generation is an expense shared by all of Pacific’s customers, from Wyoming and Utah west to California. If the company gets the revenue it anticipates, that will take the edge off some requested rate increases.

As a matter of fact, pending state-by-state increases would up the cost per Kwh for irrigation pumps before 2006. That’s another reason LaBriere has to say the “ink isn’t dry yet.”

Tam Moore is based in Medford, Ore. His e-mail address is tmoore@capitalpress.com.





Page Updated: Thursday May 07, 2009 09:14 AM  Pacific

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