Introduction

The vital importance of water in the West is a given. It is the basis upon which everything moves forward – the burgeoning subdivisions, the seemingly limitless acreage of fruits and vegetables and the remaining stretches of wilderness that support fish, fowl and wildlife. In addition to its life-sustaining properties, water, more specifically the force of moving water, plays a significant part of the nation’s power system by providing an inexpensive, reliable and renewable generation source.

Hydropower generation is prevalent in the West, where rapidly flowing river systems have been tapped for generations to produce electricity. Hydropower is a clean, steady and reliable energy source, but the damming of rivers has exacted a toll on the environment, affecting, among other things, the migration of fish to vestigial spawning grounds.

All the issues surrounding hydropower generation, be they environmental, economical, recreational or otherwise are considered through license conditions issued by the Federal Energy Regulatory Commission (FERC).

Little known to most people, FERC wields considerable authority over national energy production and distribution. In California and the Pacific Northwest, FERC oversees a wide swath of hydropower projects on rivers, creeks and tributaries. Built decades ago as a vital link in the emerging power grid, the projects take advantage of the tremendous generation capacity offered by a natural landscape where water tumbles from alpine reaches to the sea with considerable force.

Today, many project licenses are due for FERC renewal. Stakeholders say relicensing is best understood as a re-evaluation of the use of water and the needs of the public. “We need to remember that rivers are a public resource and that we’re allowing a private company to use that resource and generate a profit,” said Jim Canaday, senior environmental scientist and chief of the State Water Board) FERC licensing unit. “PG&E, Southern California Edison and SMUD (Sacramento Municipal Utility District) are there to generate electricity. Power is ‘A’ number one.”

Power utilities are not the only entities concerned with FERC relicensing. Water agencies with hydropower projects find they have a slightly different stake in the outcomes of the process.

“The perspective between the typical public agency and PG&E is different,” said Steve Felte, general manager of the Tri-Dam Project on the Middle Fork of the Stanislaus River. “For us, it’s a combination project where water supply is very critical and equal to, if not more important, than hydropower.”

Indeed, it is the concern regarding potentially lost supplies that should cause water purveyors to become aware of the FERC process.

“From a statewide perspective, the process itself would be of interest to water agencies because, even though the relicensing process is administered by an energy regulatory agency, it has the potential to impact state water supply,” said Rick Ramirez, program manager for the relicensing of the Department of Water Resources’ (DWR) Oroville facilities. Oroville is one of the higher profile FERC relicense projects, encompassing an extensive amount of expert analysis and discussion with stakeholders.

Water supply is a significant area of concern for FERC, which recognizes that “needed water is paramount” in arid regions that are prone to drought, said J. Mark Robinson, director of FERC’s Office of Energy Projects.

Depending on the water year, hydropower represents between 9 and 30 percent of the electricity used in California, according to the California Energy Commission. FERC licenses 119 projects in California, 37 percent of which are due for renewal by 2015. Along the way, many questions will be raised about balancing all the demands placed on rivers, from water supply, power generation and flood control to environmental protection and recreational and economic opportunities.

FERC relicensing is a Byzantine, exhaustive process that tests the stamina and dedication of all its participants. At least five years in the making, a relicensing proceeding is challenging to even the most seasoned of applicants, such as PG&E, which holds 26 licenses for a hydropower system located in 16 river basins from Redding to Bakersfield, including 19 powerhouses in the Feather and Pit river watersheds. Inherent in the relicensing process is the understanding that hydropower operations must be modified to account for the modern sensibilities of resource protection.

“We are now 50 years past the era of dam building,” said Eric Ginney, a senior geomorphologist with the Louis Berger Group in Chico, a FERC contractor. “Today, there’s sensitivity to things like environmental and economic issues.”

FERC relicensing represents an opportunity to achieve a slew of goals, from increased flows and habitat protections, to enhanced recreational and public access conditions. However, conflicts can arise. Whitewater rafting advocates may want greater flows but releasing the water may not always be beneficial to fish. As such, organizations have learned they need to set aside their differences and form strategic alliances to achieve a mutually agreeable outcome.

“Our primary goal is river restoration, not just releases for whitewater,” said Dave Steindorf, stewardship director with American Whitewater. “It’s about having a more efficient use of the resource.”

Ginney analogizes the relicensing of a hydropower project to a full engine rebuild on an old car that is still serviceable. “You’re not going to junk the car, even though it might be a gross polluter,” he said. “You’re going to tune it up, and that’s when some interests might ask for luxury options or added horsepower.”

Hydropower generation projects not owned by a federal agency come under FERC’s jurisdiction because the electricity they produce is sent to the expanse of the interstate power grid that lights up cities throughout the West, or if the project is located on federal lands or uses a river that is defined as navigable.

Utilities may use relicensing to seek increases in power generation but also are aware that some generation may be lost to mitigate for project impacts. In some cases, utilities opt to not seek license renewal for projects deemed less than cost efficient. “We’re always reviewing our projects for the opportunity to enhance generation,” said James Holeman, senior project manager for power generation with PG&E, noting that, “through relicensing, the general rule is there’s a decrease in production.” A FERC review of 246 relicensing cases in 2001 found that on average, dam owners experienced a 1.6 percent decrease in energy production. The National Hydropower Association, a trade group representing the hydropower industry, puts the loss at generation nationwide at about 8 percent.

Given the many years of project operations and the existing knowledge of pre-project conditions, river advocates seek as many improvements as realistically possible within the confines of the project and the knowledge that practically all river systems have been changed to some degree by human influence. “Let’s face it, water is the issue, particularly here in California,” Steindorf said. “We don’t advocate for resources or recreational opportunities that would not have existed pre-project.”

Nonetheless, environmentalists say much can be done, from restoring lost bypass reaches to establishing long-term agreements for healthier instream flow patterns for fish.

“This includes flows ranging from minimum flows in the summer months to winter and spring pulse flows that are beneficial and necessary for the long-term maintenance of the house in which fish live,” said Curtis Knight, northeast conservation manager with California Trout.

Activists may push for aggressive river habitat restoration, but it is the state and federal resource agencies that carry significant weight in the relicensing process through what’s known as “mandatory conditioning authority.” Agencies such as the National Marine Fisheries Service, U.S. Fish and Wildlife Service, U.S. Forest Service and the State Water Board have the statutory authority to impose rules that ensure relicensed projects are fully compliant with such laws as the Clean Water Act and the Endangered Species Act.

The State Water Board exercises its authority over hydropower projects through Section 401 of the Clean Water Act, which requires standards for a host of water quality parameters and confirmation that a project supports all beneficial uses, including power generation, water supply, preservation of fish and wildlife and recreational opportunities. Oddly, Canaday said, FERC controls the final license conditions for private and public projects but not federal projects, which nonetheless have to meet all applicable state laws.

“With our water quality certification authority we put conditions on the project that are mandatory,” he said. “We can determine flows to protect the beneficial uses of the river.”

FERC examines all the beneficial uses of a water body that is part of a hydropower project, from power production to the protection of the aquatic environment and development of recreational opportunities. As part of this balancing act is the need of resource agencies to enforce regulations written to protect water quality and endangered species. Licenses are usually renewed following an extensive process in which project operators, government representatives and advocacy groups meet to develop mutually agreeable license conditions. Nonetheless, the concern remains that the process is tilted against power producers.

“No one looks at the big picture of how hydropower fits into our national energy and environmental policy,” said Jim Hancock, legislative affairs committee chair for the National Hydropower Association, in February testimony before the House subcommittee on energy and air quality. “This lack of perspective has weakened the hydropower resource [and] balance must be restored.”

Robinson acknowledged the issue “does at times pose a problem for us,” but that “by and large” FERC is able to resolve differences it may have with agencies that have a hand in relicense conditions.

This issue of Western Water examines the complicated world of FERC relicensing and the process of evaluating hydropower projects licensed decades ago in light of today’s societal values and the need to balance all the uses of the natural resource.

NOTE: A complete copy of this 16-page magazine is available from the Foundation for $3. Visit our Products Page and add the September/October 2005 issue of Western Water to your shopping cart.

Editor’s Desk

Newspaper headlines in August heralded some of the starkest news ever involving water. I was struck first by one: “Delta water agency takes it on chin,” then jolted a few days later by the human and environmental tragedy of Hurricane Katrina. Both serve as sobering reminders of the need to invest in and maintain the structures that bring us water to use and protect us from its darker side.

The “Delta water agency,” of course, is CALFED, and Gov. Arnold Schwarzenegger has asked the state’s Little Hoover Commission to look into the program’s governance by the Bay Delta Authority. Attending the hearing on a hot August day was like being at a class reunion of those who fought about these issues, and for Sue McClurg and me, it was more than interesting because we covered the birth of CALFED.

The program has been successful in bringing warring interests and federal agencies together to work out their differences without constant lawsuits. But after an initial rush of funding, CALFED finds its ambitious program for delivering clean and reliable water for millions of Californians while maintaining a healthy ecosystem is caught on the shoals of financial woes and sharply declining numbers of some key fish species in the Delta.

Leaders who helped create CALFED, such as former Gov. Pete Wilson, former Interior Secretary Bruce Babbitt and former Resources Secretary Douglas Wheeler, recalled the difficulties of forging the CALFED agreement. Babbitt and Wheeler agreed that more education is needed to help the public understand its vital interest in funding infrastructure and restoration projects.

How vital that interest is was brought home a few days later by the devastation wreaked by Hurricane Katrina on the Gulf Coast. I was reminded of how fragile it can be living in a city behind a levee system. Central Valley cities, especially Sacramento, have experienced this type of flooding historically and have come close to flooding twice in the last 20 years. The Delta experienced a large levee break last summer on a sunny day. The Department of Water Resources warns that our state’s levee system “is deteriorating and, in some places, literally washing away.” It will take tax dollars from all of us to shore up this system. Yet even now there is little consensus to move forward with programs to accomplish the needed improvements.

The common theme illustrated by these seemingly disparate events is how hard it is for stakeholders to keep focus on a long-term goal and to keep believing they will get some benefit from the solution. Just as it will take many years to rebuild after the destruction caused by Katrina, it will take many more years of commitment to fully realize the vision of CALFED. In the meantime, can we find the way to understand that we are all “beneficiaries” of our great water system? If we can understand that we need to invest in protection of that system, maybe we can agree that we should invest a few of our dollars in our own and our children’s water future.

– Rita Schmidt Sudman

In the News

Report Says Continued Growth Could Lead to Substantial Water Demand By 2030

A new report by a Bay Area think tank warns that if current water use levels remain, California’s urban water demand could climb 40 percent by 2030, with outdoor irrigation at new housing subdivisions a major contributor.

The report, Water for Growth: California’s New Frontier, by the Public Policy Institute of California notes that much of the state’s new residential growth is taking place in hot inland regions in the Central Valley and Inland Empire where the climate places greater demand on outdoor watering. The state is expected to add 14 million more people by 2030. Per capita water use in 2000 measured 232 gallons per person each day.

Ellen Hanak, author of the report, said it’s important to consider the potential demand for water in areas with rapid growth because “frankly, conservation measures in those regions are not as far along” as other areas, including the use of tiered pricing for use. More than half the connections in the San Joaquin Valley are not metered, she said.

However, “ample opportunities” of supply options exist in the coming years to help keep pace with demand. “These options are diverse; groundwater banking, recycling and water transfers are each likely to play at least as big a role as the expansion of surface storage,” the report says. Also playing a significant role is increased urban conservation, which could make an additional 2 million acre-feet of water available annually.

The report, prepared to analyze California’s preparedness for meeting its growing water needs, examines several aspects of the supply/demand equation, from tying land use to available water to improvements in groundwater management and the role of the Department of Water Resources (DWR) in furthering water efficiency. DWR’s draft California Water Plan (Bulletin 160), scheduled for final release in December, outlines three demand scenarios. One calculates current trends that track with Hanak’s findings, said Scott Matyac, senior land and water use scientist.

The Public Policy Institute’s report credits the enactment of “show me the water” legislation for helping local governments cope with the planning of largescale residential development, noting that “this screening condition puts a spotlight on local land-use decisions that would have been inconceivable for most of the past century, when it was typically assumed that new supplies could be mobilized to accommodate new residents.”

The report also notes there is room for manipulating the “carrot and stick” approach toward water conservation aimed at local agencies in a way that retains financial incentives while strengthening the state’s regulatory role. Hanak said an example of that process would be the denial of new water use permits for entities that have not demonstrated adequate supply planning. Matyac said there may be a more “direct role” for DWR to assume in local water planning, perhaps through more stringent evaluations of urban management plans.

– Gary Pitzer