U.S., Canada considering proposed revisions to Columbia River Treaty

The U.S. Department of State and the provincial government of British Columbia are considering final recommendations concerning the future of the Columbia River Treaty, reviewing the changes each country would like to see made to the 49-year old agreement.

“After three years of collaboration with a wide variety of interests in the region, we believe we are recommending a win-win approach to the future of the Columbia River Treaty that will be broadly supported by the people of the Pacific Northwest,” Elliot Mainzer, acting BPA administrator and chair of the U.S. Entity, said in a statement announcing the submission of the draft document to the State Department.

The U.S. Entity, which consists of the Administrator of the Bonneville Power Administration (BPA) and the U.S. Army Corps of Engineers Northwestern Division engineer, is charged with formulating and carrying out the operating arrangements necessary to implement the Columbia River Treaty. It submitted its proposed changes to the U.S. Department of State Dec. 13.

The State Department will use the final recommendation to begin a federal policy review process to determine whether to proceed with a treaty modernization effort with Canada.

The Canadian Entity – BC Hydro – completed its community consultations on the draft recommendations it released Oct. 16 and has submitted its final recommendation to the B.C. government, a spokesperson for the Ministry of Energy and Mines told TransmissionHub Dec. 30. A final decision is expected in early 2014.

The final recommendation submitted by the U.S. Entity supports a modernized treaty that would simultaneously better address the region’s interest in a reliable and economically sustainable hydropower system and reflect a more reasonable assessment of the value of coordinated power operations with Canada. It would also continue to provide a similar level of flood risk management to protect public safety and the region’s economy, include ecosystem-based function as one of the primary purposes of the treaty and create flexibility within the treaty to respond to changing conditions including climate change, water supply needs and other potential future changes in system operations.

While proposed changes by the United States and Canada are substantially similar in many regards, a major difference that has emerged is how the value of the Canadian Entitlement is determined. The Canadian Entitlement, as currently defined in the treaty, amounts to the difference between the amounts of electricity capable of being generated in the United State with and without the Canadian storage.

Both sides agree that the current method of calculating the Canadian Entitlement is outdated and no longer equitable; however, each side believes the other is the beneficiary of that inequity.

“Treaty coordination of flows provides a number of additional benefits to the U.S. beyond just flood control and increased power generation potential [while] the Canadian Entitlement is the primary benefit Canada receives,” according to the Canadian Entity. The revisions proposed by Canada would account for those additional benefits.

The U.S. Entity’s draft revisions state that the inequity results in an unnecessarily excessive cost to utility ratepayers in the Pacific Northwest, and call for the creation of “the least-cost transmission strategy for both countries to return the Canadian Entitlement to Canada.”

According to the Canadian Entity, the parties also part company on how they value the electricity generated.

“The value the U.S. places on the entitlement reflects their estimate of what it would cost B.C. to replace the entire Canadian Entitlement using power from a new natural gas generating resource,” the Canadian Entity said, noting that the U.S. Entity estimates the cost of building and operating that new generating resource to be $250m to 350m per year. 

By contrast, Canada values the entitlement by calculating the amount of revenue it actually receives when the generated electricity is sold at prevailing market rates. In 2012-2013, the entitlement was worth C$90m, and is predicted to be worth approximately C$150m in 2014-2015, the Canadian Entity said.

The treaty, signed in 1961 and ratified in 1964, was crafted after major flooding along the Columbia River in the spring of 1948. Its two primary purposes are hydropower generation and flood control. Under provisions of the treaty, Canada built the Duncan, Keenleyside and Mica dams to create 15.5 million acre-feet of storage capacity that would be used to help smooth out the river’s seasonal flow for both flood control and managing power generation needs. The Canadian Entitlement was designed to compensate Canada for the costs of building and operating that infrastructure.

The treaty, with a term of 60 years, includes a provision that either side can unilaterally terminate most treaty provisions as early as Sep. 16, 2024, with a minimum of 10 years’ notice.

Now that the final recommendation has been delivered to the State Department, the U.S. government will formally take up the question of the Columbia River Treaty. That process will be a federal, interagency review under the general direction of the National Security Council on behalf of the U.S. president, according to the U.S. Entity.