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Tuesday, August 11, 2020

ANALYSIS/OPINION:

Presidents come and go, but State Department inaction is forever — and energy consumers in the Pacific Northwest are paying for it.

Because the State Department has dragged its feet on renegotiating the Columbia River Treaty, set up in the early 1960s to regulate flows on the river and generate hydroelectric energy, Americans are not only paying Canadians for power produced by American-paid dams, they are providing energy from those dams to Canada according to an outmoded formula that the State Department has not gotten around to addressing.


The formula to calculate the payment to Canada was set up to equal half of the downstream power benefits from the Canadian dams. Now, it represents all of the power benefits, meaning we’ve gone from splitting the benefits to Canada getting all of them.

Under the agreement, the United States built three dams in Canada to regulate the river, protect Portland and other cities from floods, and provide the hydroelectric power to power companies on the Canadian side.

The value of the power and cash provided to Canada now exceeds by 30% or 40% the value of the dams the United States paid to build in Canada — we will have paid for it twice if this is not fixed in the next 30 years. Yet, rate-payers in the Pacific Northwest continue to pay higher rates to support the provisions of the treaty.

The thing is both sides recognized from the start that the conditions underpinning this treaty would change and that it would need to be renegotiated — and both more or less targeted 2024 as an ideal time to update.

That’s why one provision of the treaty set 2014 as a date to give 10 years’ notice of withdrawal from the treaty and another set 2024 as a date when many of the river flow management aspects become less defined.

Each country named “entities” to implement the treaty from its side: The U.S. entities are the head of the Bonneville Power Association and the chief of the Northwest Division of the Army Corps of Engineers.

The U.S. entities have done their jobs when it comes to trying to keep the treaty up to date. They worked with a variety of federal agencies, state officials and tribal representatives to develop a recommendation for how the treaty should be updated and sent it to the State Department in 2013. The agreement called for attempting to renegotiate the treaty until 2015 and to then provide the 10-year notice if no agreement could be reached.

It was obvious the treaty needed to be reworked. The cost of the dams — the justification for the payments to Canada — was met in 2002. The formula to calculate the payment to Canada was set up to equal half of the downstream power benefits from the Canadian dams. Now, it represents all of the power benefits, meaning we’ve gone from splitting the benefits to Canada getting all of them. The money doesn’t even go to energy; British Columbia uses it to fund social programs.

But the State Department did nothing, even though the cost to rate-payers of this inaction is estimated at between $150 million and $300 million per year, depending on energy prices.

The only answer at this point is for President Trump to announce immediately the United States is withdrawing from the treaty. It won’t provide any relief for rate-payers in the Pacific Northwest until 2030, but it will give the Canadians incentives to work on the flood plain issues that need attention by 2024.

Unless addressed, by 2024, the United States will be obliged to provide Canada with about 450 megawatts of energy and 1,300 megawatts of capacity each year. As of now, the payment to Canada is calculated based on what power the U.S. side would have produced without the dams versus the amount produced with the dams. As we near year 60 of the agreement, Canada long since has been rewarded for allowing the dams to be built and the storage capability already is in place, that’s the wrong baseline, power officials say.

And it’s time for the State Department, which has reworked so many other agreements during the Trump administration, to rework this one.

• Brian McNicoll, a freelance writer based in Alexandria, Va., is a former senior writer for The Heritage Foundation and former director of communications for the House Committee on Oversight and Government Reform.


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