A utility’s plan to end a longtime power subsidy could mean less water going to agriculture

A utility’s plan to end a longtime power subsidy could mean less water going to agriculture

U.S. Water News Online
March 01, 2005


Through sickness and health, drought and abundance, Klamath basin farmers have been wedded to dirt-cheap power for nearly nine decades.

Electric pumps lift water from an aquifer, help pull it from lakes and canals, spray it over some 450,000 acres of crops and then push the agricultural overflow back uphill from Tule Lake to the Upper Klamath National Wildlife Refuge, to start the process again.

But there’s trouble afoot, and this once-happy union of power and water, in the largest battleground over the federal Endangered Species Act in the country, is on the brink of dissolution.

Portland, Ore.-based PacifiCorp, whose vast six-state service area includes the Klamath basin, overlapping southern Oregon and Northern California, wants to end subsidized power rates next year for 1,300 irrigators that have been virtually unchanged since the power started flowing in 1917.

The impact will be costly to all, and devastating to many.

Rates will go from 0.6 cents to more than 6 cents per kilowatt-hour — a tenfold increase.

The Tulelake Irrigation District in Northern California, for example, has been told that its annual power bill is expected to rise from about $70,000 in 2003 to $1.05 million in 2006, said Ed Danosky, general manager.

Farmers are screaming about economic disaster and broken promises.

“People are going to suffer,” said Steve Kandra, president of the Klamath Water Users Association, who said he believes many will resort to more wasteful irrigation flooding that uses a lot less juice.

But others see market-based power rates for irrigators as the much-needed catalyst for resolving entrenched conflicts between agriculture and fish. The irony is that by leaving it to market forces rather than government, they say, fish and farmers could end up healthier.

Especially in the hillier portions of the basin in Oregon, where sprinkler irrigation is dominant and flood irrigation impractical, high power rates can be an incentive to forgo farming on marginal lands.

“If even 40,000 acres of these most marginal lands went out of production, using a rule of thumb of 2.5 acre-feet of water per acre, that’s 100,000 acre-feet of water returned to the system,” said Jim McCarthy of the Oregon Natural Resources Council.

Oregon State University economist William Jaeger said salmon could be the beneficiary of weeding out the marginal operators. But the vast majority of farming operations should do just fine despite the high power rates, he said, and the payoff for them would be a reduced threat of losing water deliveries during dry years when fish need them more.

“I see a potential for a compromise on a middle ground solution to problems in the upper basin,” said Jaeger, who has extensively studied the Klamath basin and its intractable conflict over water.

The dispute is over who should have priority to receive water when it’s in short supply — farmers, who were lured to the basin nearly a century ago by government water policy, or endangered suckerfish and salmon whose declining health has devastated a cultural and economic way of life along the Klamath River all the way to the Pacific Ocean and beyond.

Glen Spain, Northwest regional director of the Pacific Coast Federation of Fishermen’s Associations, said the dispute is a classic supply-and-demand situation and that applying market-based rates for the power that runs the irrigation network could begin to even the scales.

“Is this a magic bullet?” he asked. “No, but it will sure help.”

On the surface, these are not issues that concern PacifiCorp. Its decision to end the subsidies is a simple business issue, the company said, not some grand altruistic search for a solution to the Klamath basin’s water wars.

“Let’s not pretend this is going to be easy on people,” said Jon Coney, a PacifiCorp spokesman. “We are doing everything in our power to help these customer groups through this.”

But the timing of the company’s decision to end the subsidies adds to the complexity, and the suspicions.

The company’s 50-year license to operate its Klamath hydroelectric projects expires next year, and in relicensing proceedings before the Federal Energy Regulatory Commission the company is under pressure to do more to protect downstream fish, including taking down dams.

While cheap power has been associated with the relicensing, PacifiCorp regards them as separate processes, adding that state law now prohibits the renewal of the special irrigator rates.

“We are a cost-of-service utility,” he said, and the company can’t offer one subset of customers a special deal that its 1.6 million other customers absorb.

“We will come out of this financially neutral,” Coney said.

But Kandra, of the Klamath Water Users Association, charged that PacifiCorp is reneging on a commitment it made for the right to generate power in the basin.

“It shouldn’t be acceptable to anyone in the United States that a utility gets the run of a river and does not compensate the people who provide them that run,” he said.

Kandra also disputed claims that fish were going to benefit from the pain of irrigators, all of whom are family farmers rather than big industrial operations. It’s the irrigators who pay to move water throughout the basin, he said, and its eventual return to the Upper Klamath National Wildlife Refuge helps fish and waterfowl.

“Salmon and the wildlife refuges are going to suffer, too,” he said. “If you’re trying to strike at the heart by bankrupting a bunch of farmers, you will be disappointed in the results. This will make things worse, not better. It’s a giant step backward.”

Jaeger, however, said the plan could hold more promise.

An analysis he did for Oregon State University’s extension service concluded that farmers who irrigate their lands by sprinkler could expect annual costs to rise by $40 an acre, perhaps encouraging more efficient low-pressure systems.

But for marginal operations, he said in the report, loss of profitability would create new incentives for selling water rights, thus creating an important new tool to relieving the demand side of the equation.

And that, he said, could mean “lower-cost solutions to the region’s water conflicts, thereby reducing the potential harm to the region’s overall agricultural economy.”

The Klamath Water Users Association and others are fighting the proposed rate increases before the Oregon Public Utility Commission in a rate case that has drawn environmentalists and fishermen to the utility’s side. Soon a new rate case will begin in California.

There’s a chance that in the settlement talks over relicensing PacifiCorp’s hydroelectric operations the rate increases would be modified.

But Danosky, whose Northern California irrigation district could be hit the hardest, said he is convinced the good times are ending for irrigators.

“This is a business deal,” he said of PacifiCorp. “It’s a contract. It has been 50 years. And it’s been a heck of a deal.”

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