8. How Should KHSA Assets
be Disposed of?
PacifiCorp requests authorization, pursuant to Public Utilities (Pub. Util.) Code § 851 (Section 851) to transfer the Klamath assets at a later date to a DRE, conditioned upon completion of specific milestones set forth in the KHSA. PacifiCorp requests the authorization to transfer be accomplished via a separate Tier 1 advice letter confirming the attainment of the milestones listed below.50 PacifiCorp states that delaying Section 851 approval to a later date as part of a separate application would create another regulatory precondition of the KHSA, which may heighten uncertainty to KHSA implementation as a whole.
PacifiCorp requests that the milestones include:51
a. The passage of federal legislation which contains provisions that are materially consistent with Section 2.1.1.A of the KHSA;
b. The availability of sufficient funds to cover estimated costs of dam removal, provided by California and Oregon customers, as set forth in Section 4.1 of the KHSA;
c. An Affirmative Determination by the United Stated Secretary of the Interior determining that the costs of dam removal will not exceed available funds, removal of the dams will advance restoration of the salmon fisheries of the Klamath basis, and removal of the dams is in the public interest as required in Section 3 of the KHSA; and
d. The issuance by the Dam Removal Entity (DRE) of the DRE Notice, as defined in Section 7.4.1 of the KHSA, at such time as all necessary permits and approvals have been obtained for the removal of a main stem dam, all contracts necessary for facility removal have been finalized, and facility removal is ready to commence.
DRA recommends that the Commission (i) grant PacifiCorp conditional approval of its request for the transfer of Klamath assets, provided PacifiCorp files a an annual status report on the risks, uncertainties and milestones identified in the KHSA and elsewhere, and (ii) require PacifiCorp to file a Section 851 application 60 days prior to a Klamath asset transfer.52 This is due to DRA's concern that there are significant risks that the KHSA will be terminated or the terms and conditions of the KHSA altered. DRA also states that decision makers are entitled to information regarding KHSA related events that occur subsequent to this proceeding, before authorizing the transfer of Klamath assets.53
Conservation Groups support PacifiCorp's Section 851 request, and believe that DRA's request for further review is duplicative and unnecessary to protect PacifiCorp's ratepayers.54
In their Reply Comments, PacifiCorp55 and the Conservation Groups56 state that the inclusion of milestone d listed above may conflict with the timely removal of the Klamath assets, and that only milestones a, b, and c should be fulfilled and milestone d be expected to be fulfilled within six months, before PacifiCorp may file a Tier 3 advice letter requesting disposition of the Klamath assets.
Given the amount of time that will pass between the current decision and disposition of the Klamath assets, as well as the controversial nature of the issues addressed by the KHSA, a more detailed review of the request for transfer is required. During this time, events may occur that affect disposition of the Klamath assets. We find, though, that since the Commission has performed a review of PacifiCorp's KHSA requests in the current proceeding, it and the parties will only need to review events that occur subsequent to this proceeding in regards to whether the Klamath assets should be transferred or not. We find that this limited review can be performed in a Tier 3 advice letter review, which balances the need for a limited review with PacifiCorp's request for a quicker final approval of the transfer the Klamath assets.
In an effort to balance PacifiCorp's request for a quicker and less detailed Tier 1 advice letter filing and DRA's recommendation of a new application to resolve the disposition of the Klamath assets, as well as our finding that a review, albeit a limited review of events that occur subsequent to the issuance of this decision should be performed, we approve herein the later transfer of the Klamath assets to the DRE, subject to PacifiCorp's compliance with the conditions noted below and the Commission's determination by resolution that those conditions have been met. We therefore require PacifiCorp to file a Tier 3 advice letter to request authority to dispose of each individual Klamath asset after milestones a - c listed above are met, all permits, approvals, and contracts other than those granted by this Commission regarding the specific Klamath asset have been received, and the transfer of the specific Klamath asset is expected to occur within six months. We have modified milestone d listed above, since inclusion of milestone d as originally requested by PacifiCorp would create a circular requirement, where achievement of milestone d would be required to request our approval for the transfer, but milestone d would not be achieved until Commission approval is granted. We have therefore modified milestone d, to eliminate both the requirement for this Commission's approval and the requirement for the DRE notice, which also appears to require advance approval by this Commission. As thus revised condition d will require a showing that:
d. All necessary permits and approvals have been obtained for the removal of a main stem dam, except for the approval of the California Public Utilities Commission; all contracts necessary for that facility's removal have been finalized and that facility's removal is ready to commence within 6 months; and the DRE is prepared to issue the DRE Notice, as defined in Section 7.4.1 of the KHSA, after receipt of this Commission's approval of the transfer of the facility.
While we incorporate PacifiCorp's suggestion that the advice letter can be filed at a time when dam removal is expected to begin within six months, we decline to delete the requirement that all other permits are in hand and that all contracts have been finalized before PacifiCorp files the advice letter. The Commission wants to be sure that at the time it authorizes the actual transfer of the Klamath Assets to the DRE, the dam removal will occur and is not subject to the risk that some other approval will not be obtained. Use of a Tier 3 advice letter should require much less time to process than an application, while providing all parties the opportunity to provide input on the process and the Commission to perform a more informed review to determine PacifiCorp's compliance with all applicable requirements closer to the time of disposition.
50 A.10-03-015 at 7-9.
51 A.10-03-015 at 7-8.
52 Exhibit DRA-001R at 12.
53 DRA Opening Brief at 16-17.
54 Conservation Groups Opening Brief at 19 and Conservation Group Reply Brief at 6.
55 PacifiCorp Reply Comments at 5.
56 Conservation Groups Reply Comments at 1.
