An Overview of the Pick-Sloan Missouri Basin Program

U.S. Department of the Interior Great Plains Region Bureau of Reclamation Roger S. Otstot Economist Great Plains Region Bureau of Reclamation (406) 247-7706 [email protected] Table of Contents Page

A Brief History of the Bureau of Reclamation ...... 1 The Missouri River Basin ...... 3 The Missouri River Basin History (Pre Pick-Sloan) ...... 4 The Pick-Sloan Plan ...... 6 Authorized Purposes ...... 10 Flood Control ...... 10 Navigation ...... 10 Irrigation ...... 11 Power ...... 14 Water Supply ...... 14 Recreation ...... 14 Fish and Wildlife ...... 14 Water Quality ...... 15 Interagency Relationships ...... 15 Pick-Sloan Power ...... 18 Project-Use Pumping Power ...... 18 Preference Power ...... 19 Non-Firm Power ...... 20 Basic Economics/Finance of the Pick-Sloan Program ...... 20 Power Repayment ...... 20 Organization of the Power Repayment Study ...... 22 OM&R Budget Process ...... 25 RAX Program ...... 25

Figures

Figure 1 The 17 Reclamation States ...... 1 Figure 2 Source of the Missouri River; 98th Meridian ...... 5 Figure 3 Map of the Pick Plan from HD-475 ...... 8 Figure 4 Map of the Sloan Plan from SD-191 ...... 9 Figure 5 Map of Navigation Channel ...... 11 Figure 6 Current In Service Pick-Sloan Irrigation Units ...... 13 Figure 7 Pick-Sloan Planned vs. Actual Capacity as of 2009 ...... 14 Figure 8 Western Area Power Administration Divisions and related Pick-Sloan Powerplants - Map ...... 17 Figure 9 Pick-Sloan Powerplants by Division – Chart ...... 18 Figure 10 Project-Use Power Share ...... 19 Figure 11 Powerplants in the Great Plains Region - Map ...... 23 Figure 12 Powerplants in the Great Plains Region - Chart ...... 24

Tables

Table 1 Pick-Sloan Ultimate Development Acreage ...... 11 Table 2 Pick-Sloan Ultimate Development Acreage, Reauthorized Units 12 Table 3 Pick-Sloan Powerplants by Capacity ...... 16 Table 4 Yellowtail Construction Costs Allocation ...... 20 Table 5 Ancillary Services Provided by Western ...... 22 Table 6 P-SMBP Eastern Division/Upper Great Plains Region Rates Effective Jan 1, 2010 ...... 22 Table 7 Loveland Area Projects/Rocky Mountain Region Rates Effective Jan 1, 2010 ...... 22

A BRIEF HISTORY OF THE BUREAU In July 1902, in accordance with the OF RECLAMATION Reclamation Act, Secretary of the Interior Ethan Allen Hitchcock Since they settled the arid Great Plains, established the United States early settlers have used irrigation for Reclamation Service within the U. S. agriculture. They simply diverted water Geological Survey (USGS). The new from streams at first, but there wasn’t Reclamation Service studied water enough water to grow crops. Settlers development projects in each western wanted to store runoff from rain and state with Federal lands. Revenue from snow to make more water available in the sale of Federal lands was the initial drier seasons. Private and state- source of the program's funding. With sponsored irrigation projects were no Federal lands, Texas did not become pursued but usually failed because of a Reclamation state until 1906 when lack of money. They also often lacked Congress passed a special act including engineering skills and the necessary it in the Reclamation Act. From 1903 to technology. 1906, Reclamation began about 25 projects in Western states. Figure 1 Pressure mounted for the Federal shows the 17 western reclamation Government to undertake storage and states. irrigation projects in the Great Plains. Irrigation projects were known as “reclamation" projects then. The idea was that irrigation would “reclaim arid lands for human use.” The reclamation movement demonstrated its strength when pro-irrigation planks found their way into both Democratic and Republican party platforms in 1900. Congress finally passed the Reclamation Act of June 17, 1902.

Figure 1. The 17 Reclamation States

In 1907, the Secretary of the Interior separated the Reclamation Service from the USGS and created an independent bureau within the Department of the Interior. The agency was renamed the "Bureau of Reclamation" in 1923.

During Reclamation’s early years, projects encountered many problems. Reclamation Seal – 1908 Lands and soils were unsuitable for irrigation. Land speculation sometimes

Page 1 of 26 resulted in poor settlement patterns. included the Columbia Basin Project, Proposed repayment schedules could authorized in 1933, the Pick-Sloan not be met because of high land Missouri Basin Program, authorized in preparation costs and construction 1944, and the Colorado River Storage costs. Most settlers were inexperienced Project, authorized in 1956. in irrigation farming. Waterlogging of irrigable lands required expensive The last major Reclamation project drainage works. Projects were built in authorization for construction was in areas which could only grow low-value 1968 when Congress approved the crops. Reclamation faced increasing Colorado River Basin Project Act. A settler unrest and financial problems. In number of factors affected 1924, a "Fact Finder's Report" Reclamation’s activities after the spotlighted many of these issues. The success of the previous thirty-five years: Fact Finders Act, passed in late 1924, the rise of the environmental movement, sought to resolve some of these which strongly opposed water problems. development projects; the tragic 1976 failure of Teton Dam; announcement of the “hit list” on water projects in the late 1980’s, including Reclamation projects; general lack of funding in the budget; and lack of good project sites.

Between 1988 and 1994, Reclamation underwent major reorganization as construction of projects authorized in the 1960s and earlier drew to an end. Emphasis shifted from construction to operation and maintenance of existing facilities. Reclamation's redefined official Boulder Dam During Construction mission is now to "manage, develop, and protect water and related resources Congress authorized the Boulder in an environmentally and economically Canyon (Hoover Dam) Project in 1928. sound manner in the interest of the Large appropriations began, for the first American public." In redirecting its time, to flow to Reclamation from the programs and responsibilities, general funds of the United States. The Reclamation substantially reduced its authorization came only after a hard staff levels and budgets. fought debate about the use of public power versus private power. However, Reclamation remains a significant Federal presence in the The glory years for Reclamation projects West. For instance, it is the largest came during the depression and for the wholesaler of water in the country. It thirty five years following World War II, provides water to more than 31 million or about 1930-1965. Around 70 projects people. One out of five Western were authorized before World War II. farmers (140,000) irrigate with water Some major projects were approved provided by Reclamation. This water during and after the war as well. They

Page 2 of 26 irrigates ten million acres of farmland. Brotherhood of Electrical Workers, to This farmland produces 60% of the this day. nation's vegetables and 25% of its fruits and nuts. 6. Hydroelectric Power Revenues could be used to repay construction charges. Reclamation is also the second largest producer of hydroelectric power in the western United States. The agency’s 58 powerplants annually provide more than 40 billion kilowatt hours of power generating nearly a billion dollars in power revenues and produces enough electricity to serve six million homes.

The Reclamation project program established some principles. Details may have changed due to legislation and regulations, but the basic principles are still the same.

1. Federal monies spent on Reclamation Power plant – Boise River Diversion Dam, water development projects which around 1914 benefit water users would be repaid by water users. THE MISSOURI RIVER BASIN

2. The projects remained Federal To understand the Pick-Sloan Program, property even when the water users it is necessary to understand some of repaid Federal construction costs. the Basic geography of the Missouri River Basin 3. Reclamation generally contracted with the private sector for construction The Missouri River is around 2,540 work. miles long, making it the longest river in the United States. The very source of 4. Reclamation employees administered the Missouri River is the point in the contracts to assure that contractors’ Basin, farthest water miles, from the work meets Government specifications. confluence of the Missouri and Mississippi Rivers. That place is 5. In the absence of an acceptable bid Brower’s Spring in southwest Montana on a contract, Reclamation, especially in along the Montanan/Idaho border. It its early years, would complete a project flows into Hellroaring Creek, then into by “force account” (Reclamation Red Rock River, the Beaverhead River, employees did the construction work). which joins the Bighole River, and finally Sometimes, force account workers into the Jefferson River which joins the would become unionized, setting the with the Madison River at Three Forks stage for unionized Reclamation to form the Missouri. The Gallatin River workers, such as the International flows into the Missouri River about 100 yards from the confluence of the

Page 3 of 26 Jefferson and the Madison. Brower not only to control navigable waterways, Springs was verified as the true source but also non-navigable tributaries, if the of the Missouri River in the mid-1890’s navigable capacity of the waterway was by surveyor Jacob V. Brower. Brower’s affected by the tributary. In the same Spring is 298.3 miles from the year, Congress authorized the U.S. confluence with the Madison. Army Corps of Engineers to (Corps) to aid in navigation on the nation’s The Basin covers around 528,000 waterways. square miles, or about one sixth of the lower 48 states. The Basin includes all The Missouri River was considered of Nebraska, most of Montana, North particularly treacherous. It was also Dakota, South Dakota, Kansas, and considered a potentially great Wyoming; as well as parts of Colorado, transportation corridor, and navigation Iowa, Minnesota, and Missouri, and a was always promoted as such. small part of Canada. Although it is the However, since it was so treacherous, it longest river, and the Basin is the became known as the “Graveyard of largest, it has one of the lowest annual Steamboats.” The Corps began yields of water. “snagging: operations (the removal of hazardous trees and branches in the The combination of low water yield and river) in 1838. large land area, along with other issues, has created conflicts over river use. Those conflicts continue to this day. The river crosses the 98th meridian near Yankton, South Dakota. This is the roughly the dividing line between the arid and humid (more than 20 inches of rain per year) parts of the Basin. This put Reclamation and the Corps of Engineers in direct competition. Sunk Riverboat near Sioux City, IA Reclamation’s mission traditionally deals with water scarcity, or irrigation, while Years later in 1866, the stage was being the Corps’ mission traditionally deals set for future conflict when Congress with water abundance, flood control and enacted “prior appropriation” legislation. navigation. Figure 2 shows the Missouri This legislation recognized that River Basin with an approximation of the beneficial uses such as agriculture, th 98 meridian, as well as the source of mining, and manufacturing, were the Missouri River entitled to protection under conditions that prevailed in the arid parts of the THE MISSOURI RIVER BASIN Missouri River Basin. HISTORY: PRE PICK-SLOAN After the Reclamation Act was passed in In 1824, the Supreme Court ruled in 1902, Reclamation built a number of Gibbons vs. Ogden, that since irrigation projects in the Basin. navigation involved commerce, the Reclamation focused on irrigation to Federal government had the authority

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Figure 2 – Source of the Missouri River, 98th Meridian

Page 5 of 26 meet the needs of the Upper Basin Construction lasted from 1933 States, the Dakotas and Montana. through 1940. Its primary purpose was navigation, to provide the Nine of the original Reclamation minimum flow in the mainstem of the projects in the Basin, authorized Missouri River below Sioux City, between 1903 and 1906: Belle- Iowa for a channel that would be 6 Fourche, Buford-Trenton, Huntley, foot deep and 200 foot wide. It Lower Yellowstone, Milk River, North provided flood control benefits and Platte, Shoshone, Sun River, and was also a jobs program, providing Williston projects (Buford-Trenton much needed employment during and Williston failed). The Riverton the Depression. Project (originally a BIA project) was authorized in 1918) and The Casper- THE PICK-SLOAN PLAN Alcova (Kendrick) Project was authorized in 1935. It was the first multiple use project in the Basin. The Colorado-Big Thompson Project was authorized in 1937. Buffalo Rapids, Rapid Valley, and Mirage Flats projects, and a new Buford Trenton project, were authorized in 1939.

Meanwhile, the Corps was trying to provide navigation on the Missouri River between Sioux City, Iowa and General Pick and W. Glenn Sloan the confluence of the Missouri and Mississippi near St. Louis, Missouri. In March 1943 major flooding The original plan was to have a 200 occurred on the Missouri, hitting foot wide and 6 foot deep channel on Omaha particularly hard. In that stretch of the Missouri. response, Congress requested that the Corps review their previous Congress authorized the Corps to do plans. comprehensive river basin studies, which became known as “308” The result was a 12-page report, reports. The “308 Report” for the House Document 475, submitted to Missouri River Basin was completed Congress in early in 1944. It in 1934. It was a 1,200 page study became known as the “Pick Plan” of the entire watershed that identified after Colonel Lewis A. Pick, the navigation, flood control, Corp’s Missouri Basin Division hydropower, and irrigation projects. Engineer in Omaha. The report was completed in less than three months. Before the “308 Report” was It borrowed heavily from the Missouri completed, the Corps began River 308 Report. construction of Fort Peck Dam on the Missouri in Montana. The Pick Plan called for the Corps to construct three groups of projects.

Page 6 of 26 The first part called for construction The Sloan Plan spread the storage of 1,500 miles of protective levees out over 85 new tributary dams and from Sioux City to the Mississippi 3 new mainstem dams. The plan River for flood control and provided economic justification in the navigation. The second phase form of Federal sales of irrigation proposed construction of 18 tributary water and hydroelectric energy. dams, 11 of which had already been authorized. The last part of the plan With release of the Sloan Plan, the outlined a series of five multipurpose Corps and Reclamation were at an dams on the mainstem of the impasse. The upper Basin states, Missouri River above Sioux City. In which were interested in irrigation, total, the Pick Plan proposed supported the Sloan Plan. The lower construction of 1,500 miles of levees Basin states, which were interested and 23 dams. The plan asserted the in flood control and navigation, Corps’ dominance in the Basin and favored the Pick Plan. directly challenged Reclamation as a rival. Figure 3 shows the Pick Plan In particular, there was much as envisioned in House Document discussion about the size of the 475. navigation channel between Sioux City and the mouth of the Missouri. In 1939, as part of the Reclamation The Corps wanted to enlarge it to a 9 Project Act, Reclamation was foot deep 300 foot wide channel. authorized to plan for the use of The upper Basin states were very water in the Missouri River Basin. concerned about the amount of This plan would eventually become water required to support the known as the “Sloan Plan,” after its channel. author, William Glen Sloan, the Assistant Director in the Billings At the same time, President Regional Office. Officially known as Roosevelt was endorsing an Senate Document 191, Sloan’s organization similar to the existing name never appears in the Tennessee Valley Authority, a document. Missouri Valley Authority (MVA). Plans for an MVA failed when first Reclamation submitted the Sloan presented to Congress in the 1930’s. Plan to Congress in April 1944, However, a Federal mandate for partly in response to the Pick Plan. coordinated development in the Much more detailed than the Pick region seemed like an ideal solution Plan, the Sloan Plan proposed 90 to the stalemate between the Corps projects, emphasizing irrigation and and Reclamation. power development rather than flood control and navigation. The Sloan The news of renewed interest in an plan was to irrigate 5.3 million acres. MVA caused concern in the two Figure 4 Shows the Sloan Plan as agencies. They realized that a envisioned in SD 191. compromise had to be reached. Faced with growing public, Congressional, and Presidential

Page 7 of 26 Figure 3. Map of the Pick Plan from HD-475

Page 8 of 26 Figure 4. Map of the Sloan Plan from SD-191

Page 9 of 26 support for the MVA, the Corps and • Water Quality Reclamation scheduled a conference October 17–18, 1944 in Omaha, to Flood Control draft a joint engineering report. Although flood control is primarily the The result of the conference was a Corps’ responsibility, both Pick and one-page agreement that merged Sloan included flood control as a the two plans. With a few minor major purpose for their individual exceptions, each group merely plans. The entire system is accepted the other’s proposed regulated to prevent flood damage projects. Both parties agreed on on the downstream reaches of the incorporating and improving Fort Missouri. Each individual project is Peck Dam. The agreement also regulated to prevent project effectively crippled the MVA releases from damaging flows momentum. Not everyone was downstream from the project. happy with the plan: James S. Patton, President of the National Navigation Farmers Union, described the merger as “a shameless, loveless The Missouri River Bank shotgun wedding.” Stabilization and Navigation Project (BSNP) is designed to prevent bank The Flood Control Act of 1944, which erosion and channel meandering included the Pick-Sloan Missouri and to provide reliable commercial Basin Program, passed on navigation on the Missouri. While December 22, 1944. It included the navigation is an authorized purpose O’Mahoney-Millikin Amendment, of the Pick-Sloan Program, the which made navigation functions BNSP was specifically authorized by subordinate to beneficial Congress by the Rivers and Harbors consumptive uses west of the 98th Act of 1945. The project provides a meridian. Legislation was passed in permanent, continuous, open river 1971 that renamed the Program the navigation channel 9 foot deep and Pick-Sloan Program. 300 foot wide from Sioux City to the confluence of the Missouri and AUTHORIZED PURPOSES Mississippi Rivers near St. Louis. Figure 5 shows the navigation Section 9 of the Flood Control Act of channel. 1944, as amended, authorizes the Pick-Sloan Program for 8 purposes. Major commodities transported on They are; the Missouri include agricultural • Flood Control products, chemicals, petroleum • Navigation products, and manufactured goods. • Irrigation Crude materials such as sand, • Power gravel, and materials used to • Water Supply maintain the Missouri River BSNP are also transported on the river. • Recreation • Fish and Wildlife

Page 10 of 26 Another 2.5 million acres have been deauthorized. Currently, over 2 million acres could theoretically still be developed.

Most of remaining acreage is known as “ultimate development” acreage. Some projects already authorized are not funded due to economic or environmental concerns. Economic evaluation criteria and the state of the current agricultural economy make it extremely unlikely that most of the projects will be developed. Also, since 1964, new projects must be authorized by Congress, even if they include “ultimate development” acres. Finally, existing cost Figure 5. Map of navigation channel allocations cannot be changed unless authorized by Congress. This Irrigation restriction prevents removal of any acreage from “ultimate Senate Document 191 planned to development”. Table 1 and Table 2 irrigate 5.3 million acres in the semi- show the history of Pick-Sloan arid and arid regions of the Missouri irrigated acreage. Figure 6 shows River Basin. Of that total, around the locations of current Pick-Sloan 550,000 acres have been developed irrigation units. for irrigation by Reclamation.

Table 1: Pick-Sloan Ultimate Development Acreage Acres Adjustment Total Senate Document 191 5,307,704 5 Additional Authorizations (1954-1956) 146,460 5,454,164 Reclassification in 1958 Study (1,665,764) 3,788,400 Garrison Diversion Unit Reformulation Act of 1986 (876,060) 2,912,340 Dakota Water Resources Act of 2000 (DWRA) (55,460) 2,856,880 Reauthorized Units/Acres 388,538 3,245,418 Acreage Withdrawals/Adjustments (70,000) 3,175,418 DWRA Acres "Under Construction" (75,480) 3,099,938 Current Units Irrigated /In Service (544,638) 2,555,300

Remaining acres to be Developed/Ultimate Development 2,555,300

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Table 2: Pick-Sloan Ultimate Development Acreage Acres Full Suppl. Total SD 191 4,760,400 547,304 5,307,704 5 Additional Authorizations 146,460 Subtotal 4,906,860 547,304 5,454,164 Removal by Reclassification in 1958 Study 1,794,760 (128,996) 1,665,764 1958 Study Totals 3,112,100 676,300 3,788,400 Garrison Withdrawals Removal - 1986 GDU Act (876,060) (876,060) Removal - 2000 DWRA (55,460) (55,460) Subtotal (931,520) (931,520) Reauthorized Units in Service Riverton - 1970 64,300 64,300 Gray Goose/Hilltop - 1986 5,665 5,665 Belle Fourch - 1983 56,709 56,709 North Loup - Complete 2006 50,964 50,964 Subtotal 177,638 177,638 Reauthorized but Undeveloped Nebraska Mid-State 1967 140,000 140,000 O'Neil - 1972 10,900 10,900 Pollock-Herried 1976 15,000 15,000 Lake Andes-Wagner - 1982 45,000 45,000 Subtotal 210,900 210,900 Acreage Withdrawals Cedar Bluff (6,200) (6,200) Middle Loup (70,100) (70,100) Armel (6,000) (6,000) Subtotal (82,300) (82,300)

1958 Units In Service Increase 4,700 7,600 12,300

Total Pick-Sloan 2,491,518 683,900 3,175,418

Page 12 of 26 Figure 6. Current In-Service Pick-Sloan Irrigation Units

Page 13 of 26 Power are located within the system and the lower Missouri River. Water Development of hydropower fell to supply is also a purpose that has both the Corps and Reclamation. grown more than expected. Reclamation was responsible for marketing and distributing the Recreation hydropower. Power marketing responsibilities were turned over to The projects and facilities of the the Western Area Power Pick-Sloan Program provide a Administration (Western) in 1977 number of recreational activities. when the Department of Energy Water based recreation includes (DOE) was formed. boating, boating related activities, and swimming. Sport fishing is one The hydropower capacity developed of the main recreational opportunities in the Pick-Sloan Program has in the Basin. Hunting for both small exceeded the capacity planned in and large game is popular along the Senate Document 191 by a factor of Missouri and its tributaries. Camping four. Figure 7 shows the planned is also a popular activity. versus the developed hydropower capacity as of 2009. Recreation as an authorized project purpose has grown far beyond original expectations as recreation facilities have become more developed and the opportunities have increased. Recreation is also a source of income for businesses catering to boating, hunting, fishing, camping, and other forms of recreation.

Fish and Wildlife

Developments of the Pick-Sloan Program, as well as other projects in Figure 7. Pick-Sloan Planned vs. the Missouri River Basin, have Actual Capacity as of 2009 transformed the Missouri River and some related tributaries from alluvial Water Supply streams and rivers to a chain of long and relatively deep reservoirs. Such Along with irrigation and power, the a quantity of surface water did not Missouri River and its reservoirs exist naturally in the region. It is also supply other water uses. These a relatively dry climate. As a result, include municipal and rural water there has been a great impact on the supply, cooling water for power environment. The purchase and plants, and commercial, industrial, subsequent management of the and domestic uses. Around 1,600 lands associated with the individual water intakes of widely varying size

Page 14 of 26 Pick-Sloan projects has changed use River below cities and industries, patterns of the lands adjacent to the water quality problems in the Basin projects. Regulation of the have been relatively minor. Storage reservoirs has also affected the river space has been provided in some where it is still in a relatively natural tributary reservoirs for water quality. state. Wastewater treatment facilities rather than dilution have been The environmental emphasis and emphasized for water quality. prevailing values have change since the Pick-Sloan Program was INTERAGENCY RELATIONSHIPS authorized. Current efforts are focused on increased stewardship of The Pick-Sloan Plan resulted in an the rivers and surrounding lands by extremely complex series of maintaining them in as natural state interactions between the Corps, a possible. Environmental Reclamation, and Western. considerations also are important Irrigation and power are the primary when considering the impact of uses concerning interagency projects on fish and wildlife, which relationships. While there were includes threatened and endangered some overlapping assignments, the species. Corps retained jurisdiction over mainstem dams and the tributary Water Quality projects designed primarily for flood control and navigation. Reclamation Water quality characteristics that are retained jurisdiction over most of the of greatest concerns in the basin are tributary projects, as well as over chemicals, temperature, biological irrigation development. The organisms, taste, odor, and floating development of hydropower and material. other benefits fell to both agencies. Reclamation was responsible for The Missouri River and its tributaries marketing and distributing the have historically contained high hydropower. The power marketing sediment loading and naturally responsibilities were turned over to occurring high concentrations of Western in 1977. metals, such as arsenic and selenium. These water quality The three agencies engaged in characteristics have also changed producing and transmitting over the past several decades. The hydroelectric power in the Pick-Sloan changes are a result of past and Program are Reclamation, the current changes in land use Corps, and Western. Reclamation is practices, increased urbanization, an agency within the Department of atmospheric deposition of pollutants, the Interior; the Corps is part of the and dam construction and regulation Department of Defense; and within the Missouri River Basin. Western is an agency within the Department of Energy. The three With the exception of some tributary agencies are funded with Energy streams and isolated reaches of the

Page 15 of 26 and Water Development The Rocky Mountain Regional Appropriations. Office, in Loveland, Colorado, administers the Western Division. The Corps and Reclamation Figure 8 shows the Western Regions generate the hydroelectric power. and the related powerplants. Figure Table 3 shows the installed capacity 9 shows how the powerplants are of the powerplants in the Pick-Sloan arranged organizationally. Program. As Figure 9 illustrates, the Pick- Table 3 – Pick-Sloan Powerplants Sloan Program service territory by Installed Capacity covers all or parts of 10 states. The Powerplant kW service area is operated from two Oahe – Corps 786,030 “control areas”, an eastern Garrison – Corps 583,300 interconnection and western Big Bend – Corps 494,320 interconnection. The eastern control Fort Randall - Corps 320,000 center is operated out of the Yellowtail – Reclamation 250,000 Watertown Control Center out of Fort Peck – Corps 195,250 Watertown, South Dakota. The Gavins Point - Corps 132,300 Western control area is operated out Fremont Canyon - of the Loveland Control Center in 63,500 Reclamation Loveland, Colorado. Canyon Ferry - 50,000 Reclamation In addition to receiving power from Reclamation and the Corps, Western Glendo – Reclamation 38,000 has a number of other Kortes – Reclamation 36,000 responsibilities. It allocates the Buffalo Bill - Reclamation 18,000 power to preference customers. Boysen Reclamation 15,000 Western must determine the rates Spirit Mountain – 4,500 charged for power, transmission, and Reclamation ancillary services, and repay the Shoshone Reclamation 3,000 costs that are assigned for power. It Pilot Butte – Reclamation 1,600 must also repay capital investment. Finally, it must reliably operate the Total Corps 2,501,200 power system. Total Reclamation 479,600 Total Installed Capacity 2,980,800 Western’s mission is to market and deliver reliable, cost-based Western transmits and markets the hydroelectric power and related hydroelectric power generated by the services. It is a wholesale power Pick-Sloan Program. In terms of provider. In the Pick-Sloan Program power marketing, the Pick-Sloan service area, Western transmits Program is divided into Eastern and power across over 11,000 miles of Western Divisions, and administered transmission lines to over 400 from two Western Regional offices. customers. The Upper Great Plains Regional office, located in Billings, Montana, administers the Eastern Division.

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Figure 8: Western Area Power Administration Divisions and related Pick-Sloan Powerplants Page 17 of 26 Figure 9: Pick-Sloan Powerplants by Region and Division

PICK-SLOAN POWER The share between commercial power and project-use power has Pick-Sloan Program power sales are fluctuated as the planning for the prioritized through legislation and Pick-Sloan Program has evolved. regulation. Pick-Sloan power is used Senate Document 191 recognized for project-use pumping power, that part of the generating capacity preference (firm) power, and non- of the power would be allocated for firm power. project-use. That portion set aside for project-use power is called the Project-Use Pumping Power suballocation. The suballocation is based on the relationship between The first priority for power produced the installed capacity of the Pick- by the Pick-Sloan Program is for Sloan power system and the planned authorized irrigation projects, capacity for project-use power. The referred to as project-use power. It current suballocation of project use is used for pumping water from a power (power set aside for pumping river or a ditch for gravity flow to water to irrigated land) is 398 MW. It irrigated land. Project-use power is is based on calculations done at the not used for on-farm irrigation. The time of the 1986 Garrison water is required to be pumped from Reformulation Act. its source to the first turnout with ten feet of head. In other words, the The Pick-Sloan Program has a water must be able to provide current installed capacity of around irrigation service by gravity. 2,980 megawatts (MW). Although Reclamation administers the approximately 398 MW of total Pick- contracts with the irrigation districts Sloan Program generating capacity to provide the project-use power. is suballocated for project-use

Page 18 of 26 power, only 38 MW is currently used were integrated into the Pick-Sloan for this purpose. The difference has Program with special legislation. been set aside for future irrigation development and is marketed as Preference Power commercial power. Figure 10 shows how the power is divided The next priority for Pick-Sloan Program power is preference power. It is marketed by Western. Preference customers (also called firm customers) receive firm commercial power through means established by legislation. The Reclamation Act of 1902 was amended in1906 to give the Secretary of the Interior authority to sell surplus power. The Reclamation Act of 1939 gave preference to certain entities and non-profit Figure 10: Project Use Power Share organizations. The 1944 Flood Control Act authorized the Pick- The energy rate for project-use Sloan Missouri Basin Program. power was originally established at Finally, the 1977 Energy Act created 2.5 mills per kilowatts (kWh). It Western and transferred the power became apparent that the old rate marketing function from Reclamation was not enough to cover operations, to Western. maintenance, and replacement (OM&R) costs of the power capacity Western is a wholesale power used for irrigation pumping. A new supplier for its preference/firm rate, based upon actual OM&R customers. Western’s customers costs, was established. That rate is are public power districts, rural currently 16.17 mills per kWh. electric cooperatives, municipalities, irrigation districts, municipal, rural, There are four categories of project- and industrial water systems, Native use power users. Authorized Pick- American tribes, and Federal and Sloan Program Projects are projects state agencies. specifically authorized to use project- use power. Fort Peck Projects were The customers are divided into two built before the Pick-Sloan Program groups, those in the Eastern Division was created and became integrated of Pick-Sloan Program, or Upper in the Pick-Sloan Program with the Great Plains Region (UGPR), and passage of the Flood Control Act of those in the Western Division of 1944. Native American Projects Pick-Sloan Program, or the Rocky receive Pick-Sloan Program project- Mountain Region (RMR). About 340 use power authorized by specific customers receive their power from legislation. Two other projects, Gray the UGPR and 60 customers receive Goose and Hilltop Irrigation Districts, their power from the RMR.

Page 19 of 26 Non-Firm Power Non-reimbursable costs are costs The last priority is surplus non-firm not repaid by the beneficiaries, or commercial power, which is users, of the project. These costs marketed by Western. This is are picked up by the taxpayers. generally surplus power beyond Examples of non-reimbursable costs what Western has contractual are flood control, recreation, and fish commitments for. It is normally sold and wildlife. Table 4 shows the at spot market rates to commercial construction costs allocation for the customers. Yellowtail Project as an example.

BASIC ECONOMICS/FINANCE OF Table 4. Yellowtail Project THE PICK-SLOAN PROGRAM Construction Costs Allocation Irrigation 13.69% Project costs can be organized in a Power 40.77% number of ways. For example, when M&I 34.01% a project is built the costs are Fish & Wildlife 1.22% classified as multipurpose costs Flood Control 10.31% versus specific costs. When a project is constructed, it is usually a Another cost is aid to irrigation. Aid multipurpose project. A project may to irrigation is that portion of the be built not only for irrigation, but for project that is allocated to irrigation power, flood control, and recreation. paid for by power revenues. As A complex economic process is used stated in one of the basic principles to allocate the costs of the of Reclamation, legislation allows multipurpose project for specific that hydroelectric power revenues purposes, both for capital costs and could be used to repay construction operations, maintenance, and charges for irrigation. How much aid replacement costs (O,M&R). The to irrigation a water user receives cost allocation allows specific costs depends on their “ability to pay.” of a project to be repaid by the specific users. It also allocates the POWER REPAYMENT costs between reimbursable and non-reimbursable costs. Repayment rates are established in accordance with the Department of Reimbursable costs are costs repaid Energy Organization Act of 1977. by the users, or beneficiaries. This act transferred the power Normally these users enter into a marketing functions from contract and have a repayment Reclamation to Western. It also schedule. The primary reimbursable gave Western the authority to users are municipal and industrial develop power and transmission (M&I), power, and irrigation. All rates. The rate collects revenue reimbursable users must repay with required to recover annual expenses interest, except for irrigation. (such as O,M&R, purchased power, Irrigation users receive their benefits transmission service expenses, interest-free. interest, and deferred expenses),

Page 20 of 26 repay Federal investments, and • Annual expenses other assigned costs. • Deferred annual expenses • Required principal payments The investment contains the • Additional principal payments. reimbursable costs for power. These costs allocated to power include The two main products Western (or multipurpose costs allocated to any wholesale utility) sells are power for Reclamation and the capacity and energy. Capacity or Corps. They also include the costs demand is the amount of electricity specific to power incurred by at any given moment. It is measured Reclamation, the Corps, and in kW or MW. Energy is the amount Western. of electricity over time. It is measured in kWh or MWh. Annual expenses are recovered in the year they occur. These Western markets firm power, expenses include O&M, purchased peaking power, and non-firm power. power, transmission, and interest. Firm power is both capacity and energy. It is contractually Another expense that Western must guaranteed to be available 24 hours recover is purchased power. a day to preference customers, Purchased power is power that generally on a long term basis. Western buys when they do not have Peaking power is capacity with no enough power from generation to energy available. It is available to meet their contractual obligations. help meet a customer’s power needs Purchases may be made due to over a short period of time. Non-firm operational constraints such as power can be terminated by navigation, management of telephone notice. It is also marketed endangered species, or water as interruptible and economy power. quality. Purchased power is also It may be less expensive than firm bought because of the ongoing power, but it can also be stopped by drought. a telephone call.

Part of Western’s current rate Western also markets and receives includes a “drought adder.” Because revenue from ancillary services. In of the drought in the Missouri River the late 1990’s, the Federal Energy Basin, Western has not been able to Regulatory Commission issued meet its’ contracted obligations to Order 888. Among other things, it provide power to its customers. As a identified six ancillary services that result, Western has been purchasing are required to be included in an power from outside utilities to make Open Access Transmission Tariff. up for the lack of power generation. These services that Western sell are The drought adder is designed to listed in Table 5 below. repay the debt used to buy non- timing purchased power within 10 years. Repayments of project costs are prioritized in the following order:

Page 21 of 26 Table 5. Ancillary Services Arkansas Project is not a Pick-Sloan provided by Western Program project. Scheduling, System Control, and Dispatch Service Integrated projects are non Pick- Reactive Supply and Voltage Control Sloan Program Projects in the region from Generation Sources that are included in the PRS for rate Regulation and Frequency setting. The Colorado Big- Response Service Thompson (C-BT), Kendrick, and Energy Imbalance Service Shoshone projects were Spinning Reserve Service administratively combined with the Supplemental Reserve Service Pick-Sloan Program in 1954, followed by the North Platte Project

in 1959. All of the integrated Finally, Western markets, and projects are within the Western receives revenue from transmission Division of the Pick-Sloan Program. service. Figure 12 shows the locations of all

the powerplants in Reclamation’s ORGANIZATION OF POWER Great Plains Region. Figure 13 REPAYMENT STUDY (PRS) shows how they fit in by organization. Organizationally, the Pick-Sloan Program PRS is a complex process. Table 6 shows the Firm Power Rates First, a PRS is done for the entire for the Eastern Division for Pick- Pick-Sloan Program using all the Sloan, or Upper Great Plains considerations listed above. This is Region. Table 6 shows the rates for done out of Western’s UGPR Office. the Loveland Area Projects, or the When it is completed, separate rates Rocky Mountain Region. are computed for the Eastern Division and the Western Division of Table 6. Pick-Sloan Program the Pick-Sloan Program. These Eastern Division/Upper Great separate rates are based on the pro- Plains Region Rates Effective rated portion of the most recent Jan. 1, 2010 annual energy sales for each Firm Service Rate Division. At this point, the rate Demand $7.65/Kw month process is complete for the Eastern Energy 19.05 mills/kwh Division. Composite Rate 33.25 mills/kWh

However, the rate for the Western Table 7. Loveland Area Division portion of the Pick-Sloan Projects/Rocky Mountain Region rate must be blended with the Rates Effective Jan. 1, 2010 Fryingpan-Arkansas PRS. The Firm Service Rate resulting rate is called the Loveland Demand 5.43 $/Kw month Area Projects (LAP) rate. The Energy 20.71 mills/kwh Fryingpan-Arkansas rate study and Composite Rate 41.42 mills/kWh the blending is done in Western’s

RMR Area Office. The Fryingpan-

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Figure 11: Powerplants in Great Plains Region Page 23 of 26

Figure 12: Powerplants in Great Plains Region. Corps Power Powerplants are in red boxes. The remainders are Reclamation Powerplants Page 24 of 26 OPERATIONS, MAINTENANCE, RAX PROGRAM AND REPLACEMENT (OM&R) BUDGET PROCESS The RAX budget is for replacements, additions, and extraordinary The fiscal year (FY) begins October maintenance. Unlike the Operating 1st and ends September 30th. Budget, the budget for these items Reclamation budgets need to be can fluctuate significantly from year done three years in advance, so to year. The RAX budget is also development of the FY 2012 budget referred to as the “below the line is planned for the summer of 2009. budget. It contains significant items Reclamation’s Washington Office such as new governors, new gives the GP Region a budget target runners, and new excitation systems, level, which the Region in turn just to give a few examples. provides the Area Offices. In the 1990’s, some of the Pick- Sloan customers became concerned Area Offices submit their budget about RAX items because the RAX request by the end of the summer by budget fluctuated by millions of completing an Activity Plan. The dollars from year to year, leading to Activity Plan includes a detailed an unpredictable effect on power breakout of each program in the rates. In addition, many “big ticket” Area Office, such as Yellowtail O&M items were being put off. Program, for instance. As a result, the Western States The “Operating Budget” occurs Power Corporation (WSPC) began a annually. It is also referred to as the partnership with Pick-Sloan Federal “above the line” budget. Examples agencies to provide direct “up-front” of operating (or base) budget items funding for the RAX budget. The GP are employee’s salaries, employee Region began receiving this funding benefits, travel, utilities, rent, in FY 1997. The amount of this communications, printing, upfront funding has increased each transportation, standard service year since then. This funding is an contracts, employee training, important part of the budget process, materials, supplies, and office as well as an example of cooperation equipment. It also includes Area and between the Pick-Sloan Federal Regional indirect costs, or overhead. agencies and their power customers.

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Yellowtail Dam, Montana

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