Although the decision to decommission the 22-MW Bull Run project was a difficult one, removal of this facility allowed Portland General Electric to turn a liability into an asset and to lower the cost of relicensing the company’s remaining hydro projects.
By Julie A. Keil
It was pouring rain in Sandy, Ore., on October 19, 2007. Not unusual in and of itself, but it proved to be a momentous event. The onset of the fall rains had pushed flows in the Sandy River above 2,000 cubic feet per second, and the cofferdam that stood where Marmot Dam had been for nearly a century was showing signs of strain. By the end of the day, the cofferdam was gone and the Sandy River was flowing free from Mt. Hood to its confluence with the Columbia River for the first time in nearly 100 years.
The breaching of the cofferdam was a major milestone in the ongoing removal of Portland General Electric’s (PGE) 22-MW Bull Run project. But it was a bittersweet event for many PGE employees. PGE has a long history with hydroelectric projects, as do most utilities in the western U.S. Station A at Willamette Falls on the Willamette River, one of the company’s first projects, was the site of one of the first successful long-distance transmissions of electricity in the U.S. This 1.5-MW project was built to serve the growing city of Portland, 14 miles away.
The Bull Run project was built not long after Station A. It featured two dams: Marmot Dam on the Sandy River, a 345-foot-long, 43-foot-high timber crib rock-filled dam that was replaced in 1989 by a roller-compacted concrete dam; and Little Sandy Dam on the Little Sandy River, a 114-foot-long, 16-foot-high poured concrete dam. Other structures include 3 miles of canals and tunnels, a 2.8-mile-long wooden flume, and a powerhouse with four 5.5-MW units. Construction of the project represented a considerable engineering achievement at the time, when access was by horse-drawn stage. Horse-powered trucks, scrapers, and loaders were standard construction equipment. It is not surprising, therefore, that many PGE employees viewed the removal of the project with mixed emotions.
As much as we may wish to ignore the past, as we move into the future, we need to heed William Faulkner, who said “the past isn’t past.” Decisions we make today are influenced by decisions that were made by those who came before us; decisions we make today will limit the options available to those who follow us. Honoring the past while preparing for the future is a critical component of wise, long-term decision making.
Flows of the Sandy River over Marmot Dam were low as the dam’s planned demolition approached. The increasingly low summer flows of the Sandy and Little Sandy rivers contributed to diminished electricity production – a factor considered in the decision to decommission the 22-MW Bull Run project.
The role of hydro projects in a company’s portfolio
The Bull Run hydro project began producing electricity in 1912. The system of Portland Railway, Light, and Power Company, PGE’s predecessor company, was expanding rapidly, requiring equally rapid addition of new resources. The company’s “diverse” portfolio consisted of diesel-fired generators, a thermal plant that burned sawdust, and several hydro projects. While all of the plants played a role, the hydro projects formed the backbone of the system.
In comparison, the portfolio of a 21st century utility likely includes coal-fired projects, gas-fired projects, large hydro projects, biomass, wind, and, possibly, nuclear projects. Options will likely increase even more as new technologies such as ocean/tidal/stream power are developed. Small hydro projects, such as Bull Run, typically are no longer the backbone of a utility’s system.
Removal of the 22-MW Bull Run project’s 43-foot-tall Marmot Dam began July 24, 2007, as 4,400 pounds of explosives were ignited.
Consequently, small hydro projects have to earn their keep. For example, during a Federal Energy Regulatory Commission (FERC) relicensing, they have to prove that they are inexpensive, flexible, and capable of meeting regulators’ and customers’ expectations for minimal effects on the environment. Not all projects survive. Once a decision to remove a project is made, the hard work begins: how to decommission a hydro project to move toward the future, while honoring the past?
Relicensing leads to decommissioning
In the late 1990s, PGE was the licensee for four hydro projects, with a combined capacity of 578 MW. The license for each project would expire by 2006, and PGE had to determine how to approach the relicensing process for each.
Before embarking on its relicensing odyssey, PGE scrutinized each hydro project. Utility staff asked a number of questions: What attributes did the project bring to the system? What costs were likely to be incurred in relicensing? What other expenses would be necessary to maintain and operate the plant? How did the costs of the project compare to other reasonable alternatives?
Based on the results of this analysis, things did not look good for the Bull Run project. The operations and maintenance costs for an aging and geographically widespread project were significant, increasing during the later years of operation to more than twice PGE’s average megawatt-hour hydro expense. The Sandy and Little Sandy rivers on which the project was located have very low summer flows, diminishing annual production to nearly half of the project’s capacity. The project had the potential to continue to be an economic resource, if PGE could maintain all of its generating capacity and severely restrict new environmental obligations. But that did not seem achievable for a project with aging fish passage facilities, effects on river temperature, and significant out-of-river diversions. The presence of threatened chinook and steelhead salmon and bull trout, as well as coho salmon (candidates for Endangered Species Act, or ESA, listing) did not help either.
As a result, in 1999, PGE announced its decision to decommission the project. Rather than filing a notice of intent to relicense the project, the company informed FERC that it did not intend to seek a new license.
Planning to remove the project
Figuring out how to remove the Bull Run project turned out to be far more difficult than PGE imagined. For all of the talk about dam removal, resource agencies and environmental groups had virtually no experience in how to make it happen. They had been gearing up for a relicensing battle; PGE’s decision took them by surprise. The FERC regulations provided little practical guidance. And to further complicate matters, it turned out that some stakeholders had mixed feelings about removing this particular dam.
Marmot Dam (the project’s largest dam) played a key role in Sandy River fisheries management, allowing the coexistence of hatchery salmon in the lower river and a wild salmon sanctuary upstream of the dam; removing it would complicate fish management in the basin. Local families were distraught over the loss of 1,800-acre-feet Roslyn Lake (the project’s forebay), which provided a unique recreation area that many had enjoyed for generations.
After several false starts, PGE convened a facilitated settlement process involving 22 other parties. The task of the group was not to decide whether the project would be removed, but rather, how and when. The settlement group worked diligently with engineers, scientists, and lawyers to craft a solution that used the best information available to meet the interests of all involved. After about ten months of intense discussions, the group arrived at an agreed-upon schedule and methodology for project removal.
Several factors were critical to the success of the settlement process. The process was expertly facilitated, a first for PGE. Use of a facilitator – Debra Nudelman, now with Kearns and West – allowed PGE employees to represent the company’s interests vigorously without being concerned about also running the meetings. More importantly, the facilitator created – and maintained – an atmosphere of neutrality. This was essential to enabling all parties to express their concerns freely and to work toward a mutually acceptable resolution of the complex issues involved in removing the project.
Also, PGE committed to using the best available scientists and engineers and the best scientific tools they could develop to assess how to remove the project. PGE also allowed those professionals to interact directly with settlement participants. Trust in the underlying science and engineering formed the foundation that allowed parties to reach agreement.
Perhaps equally important, the group was working against a deadline. If PGE did not file a surrender application at FERC by November 21, 2002, the commission would “orphan” the project and solicit applications from other entities to license the project. Absent an agreement governing PGE’s obligations, there would either be an extended battle at FERC or a new licensee. Neither of these outcomes was desirable.
Finally, the lack of a clear precedent for the role of the resource agencies in a surrender proceeding at FERC – and the possibility that they might not have the mandatory authorities to which they were accustomed – provided an incentive to resolve issues before PGE filed a surrender application with FERC.
The deliberations of the settlement group reached successful conclusion in October 2002, just ahead of the FERC deadline. The group’s efforts were memorialized in a settlement agreement and decommissioning plan. These documents were submitted to FERC and were largely included in the commission’s May 12, 2004, surrender order. The order required PGE to begin removing the project in 2007 and allowed PGE to continue generating until Little Sandy Dam was removed. Roslyn Lake was drained in May 2008, at which time generation ceased. Little Sandy Dam removal was completed in September 2008.
Getting the permits
As it turns out, PGE needed all of the time between the FERC order and the 2007 in-water work season. Two key permits necessary for removal of the project proved more difficult to acquire than we anticipated: a section 404 permit from the U.S. Army Corps of Engineers and an Oregon fill and removal permit, issued by the Division of State Lands. Although the circumstances and reasons were different, each agency was reluctant to issue the permit as requested and as contemplated by the settlement agreement. The Corps was particularly concerned about the loss of Roslyn Lake’s man-made open water habitat and did not believe that the removal scheme approved by FERC contained sufficient mitigation to create the “environmental lift” the Corps believed to be required. The Division of State Lands shared this concern, but was also concerned about possible effects to lands along the Sandy River downstream of Marmot Dam. PGE provided volumes of legal and engineering analyses in a campaign to get the permits issued in time to allow Marmot Dam to be removed on schedule.
And to make matters worse, while the Corps and the Division of State Lands struggled through the permitting process, coho salmon was added to the ESA list of threatened species, requiring a last-minute round of consultation with NOAA Fisheries. The permits were issued in the nick of time in the spring of 2007, and work on Marmot Dam got under way immediately.
Successes to date
Now that project removal is under way and is in the hands of an experienced “deconstruction” team, we can reflect on the process to date. There are many ways to judge success. To some, project decommissioning and dam removal can never be a success and removal of an historic project like Bull Run is a bitter pill. Indeed, there can be no doubt that most hydro projects continue to be valuable contributors to the reliable and economic energy that our customers expect from us. This value will probably increase as concerns over global warming grow. Yet, for the few projects that cannot earn their keep, a clear-eyed, honest assessment of the project can turn a liability into an asset. Approaching a project decommissioning openly has had lasting benefits for PGE’s reputation and lowered the cost of relicensing the company’s remaining projects.
There were many moments during the settlement and permitting process when PGE could have taken advantage of obstacles to delay removal of the project. The longer the project stayed in place, operating under the terms of its old license, the more revenue PGE would accrue. Nonetheless, and despite daunting regulatory barriers, Marmot Dam was removed on time and PGE gained a reputation for fulfilling its commitments. In today’s regulatory climate, such a reputation is extremely valuable. Indeed, one can argue – and PGE’s subsequent experience confirms – that it is priceless.
The settlement process itself was another success. The Bull Run settlement process allowed all parties to experience and gain confidence in the value of a well-run collaborative process during which solutions are developed that meet the interests of all involved. A facilitated process was a new experience for PGE’s hydro staff and was initially approached with considerable trepidation. In licensing proceedings, the licensee is often seen as holding all the cards. PGE had a project that generated revenue and would continue to do so without change until there was a FERC order either relicensing the project or accepting surrender of its license. Others wanted to impose conditions that reduced the value of the project, but these conditions could not take effect until the same FERC order was issued. It would seem, at first glance, to be a “lose-win” process for the utility, particularly in a facilitated or mediated process, which would reach a resolution more quickly than a litigated FERC proceeding.
The Bull Run process also taught valuable lessons about the role of science and engineering. Participants’ ability to interact with the most expert geomorphologists and hydrologists allowed the group to reach agreement on the central issue: how to deal with the accumulated sediment behind Marmot Dam. The agreed-upon removal method, involving minimal sediment removal to facilitate deconstruction of the concrete dam, allowed the vast majority of the sediment to remain in the river. This saved PGE millions of dollars.
Significantly, PGE used this experience as a platform to initiate relicensing settlements for the three other projects that followed Bull Run. All three projects used an inclusive collaborative settlement process to develop long-term, comprehensive settlements.1 Although not all the participants were the same through all the processes, there was significant overlap and PGE’s reputation carried it through each of the relicensing settlement discussions. The settlements resulted in timely new licenses for PGE’s remaining projects that were far more advantageous to PGE’s customers than any license that might have been acquired through litigation.
PGE’s navigation of the post-settlement permitting process was another success. PGE pursued the permits diligently and doggedly, refiling its applications several times to suit shifting agency interpretations of the rules. Despite reluctance on the part of the permitting agencies, PGE staff achieved what had originally seemed impossible – permits that were consistent with the terms of FERC’s surrender order. No significant additional costs were added by the permits and they were issued in a timely manner. (Well, at least timely enough!)
After removing Marmot Dam, Oregon’s Sandy River flows free for the first time in nearly 100 years from its origin at Mt. Hood to meet the Columbia River.
Lastly, the removal of Marmot Dam was, itself, a success. It is fair to say that many in PGE’s engineering department were not whole-hearted supporters of the decommissioning. Nonetheless, they developed an efficient and economic removal plan. The plan minimized the risk to salmon and steelhead and was in full compliance with FERC’s order. The plan was executed flawlessly, due in large part to excellent on-the-ground project management.
All in all, the first removal of a large dam in the western U.S. has been a valuable learning experience for all involved. Although PGE does not intend to decommission any more projects, Bull Run was an invaluable precursor to PGE’s successful relicensing efforts, preserving the role of hydro in providing service to our customers well into the 21st century.
- Keil, Julie A., Thomas A. Mark, and Debra Nudelman, “Pelton Round Butte Relicensing: Lessons Learned from a Negotiated Settlement,” Hydro Review, Volume 25, No. 3, June 2006, pages 24-31.
Julie Keil is director of hydro relicensing and water rights for Portland General Electric.