Klamath Hydroelectric Settlement Agreement Implementation Report Klamath Hydroelectric Project FERC Project No. 2082 August 2018 Klamath Hydroelectric Settlement Agreement Executive Summary The Oregon customer surcharge, with accrued interest, is designed to provide approximately The Klamath Hydroelectric Settlement $184 million for dam removal. The California Agreement (KHSA) was signed on February 18, surcharge, with accrued interest, is designed to 2010 and the amendments signed on April 6, provide approximately $16 million in funding for 2016 and November 30, 2016. This report dam removal. As of June 30, 2018, the dam focuses on events that occurred June 1, 2014 removal trust accounts overseen by the Oregon through June 30, 2018. Public Utility Commission (OPUC) had a balance of $124.5 million and the dam removal trust Federal Legislation accounts overseen by the California Public While Senators Wyden, Merkley, Feinstein, and Utilities Commission (CPUC) had a balance of Boxer continued to support the implementation $10.1 million, for a combined balance of $134.7 of the KHSA, Klamath Basin Restoration million. The KRRC has entered into funding Agreement (KBRA), and the Upper Basin agreements with both the OPUC and CPUC and is Comprehensive Agreement, the proposed now able to access funds to implement dam legislation never moved beyond the Senate removal activities. The OPUC has allocated just Committee on Energy and Natural Resources over $27.5 million from the Oregon trust prior to December 31, 2015, at which point the accounts to the KRRC through the end of June KBRA expired. 2018. No disbursements to the KRRC were made from the California dam removal surcharge funds Amended KHSA through the end of June 2018. In early 2016 the parties to the KHSA and KBRA Interim Measures met to chart a new path forward to implement the KHSA that did not rely on congressional PacifiCorp continues to implement the interim approval. The result was an amended KHSA that measures in the KHSA in the period prior to dam specified a pathway by which PacifiCorp would removal. The company is funding basin‐wide apply to the Federal Energy Regulatory water quality monitoring and studies intended to Commission (FERC) to transfer ownership of J.C. reduce nutrient levels in the Klamath River and Boyle, Copco No. 1, Copco No. 2, and Iron Gate improve water quality in the Project reservoirs. to a specially created Dam Removal Entity (DRE). PacifiCorp has made operational adjustments to That DRE would then apply to FERC to surrender the Project and is implementing and funding of the license for these facilities and decommission fish habitat improvements within the Project and them. The amended KSHA was signed in April in the Klamath Basin downstream of Iron Gate 2016. The Klamath River Restoration Corporation Dam. PacifiCorp is also now funding the ongoing (KRRC) was incorporated in May 2017 and will operations of Iron Gate Hatchery and the serve as the DRE. implementation of a Hatchery and Genetics Management Plan to aid in the conservation and Dam Removal Funding recovery of Coho salmon. The California and Oregon public utility com‐ PacifiCorp is pleased with the progress made in missions have authorized customer surcharges implementing the KHSA and the various interim designed to provide the full $200 million capped measures that continue to create improvements amount that PacifiCorp customers will contribute to water quality, fish habitat, and other toward dam removal under the KHSA. PacifiCorp environmental conditions. PacifiCorp notes the has collected dam removal surcharges from significant contributions of KHSA parties, tribes, Oregon customers since March 2010 and from and involved state and federal agencies in these California customers in January 2012. efforts and looks forward to working with our stakeholders as these efforts continue to move forward. Implementation Report – August 2018 i ii Implementation Report – August 2018 Klamath Hydroelectric Settlement Agreement Contents Executive Summary .................................................................................................................................. i Federal Legislation ........................................................................................ i Amended KHSA ............................................................................................ i Dam Removal Funding .................................................................................... i Interim Measures ......................................................................................... i Contents ................................................................................................................................................. iii 1.0 Introduction ............................................................................................................................... 1 2.0 Parties to the Klamath Hydroelectric Settlement Agreement ................................................... 7 3.0 Funding ...................................................................................................................................... 9 3.1 Customer Contributions ....................................................................... 9 3.1.1 Oregon Public Utility Commission Proceedings .................................. 9 3.1.2 California Public Utilities Commission Proceedings ............................. 9 3.1.3 Total Trust Account Balances ......................................................10 3.1.4 Management of the Trust Accounts ..............................................10 3.2 State of California Funding ...................................................................10 4.0 Federal Legislation ................................................................................................................... 11 5.0 Studies and Environmental Review ......................................................................................... 13 6.0 Interim Operations ................................................................................................................... 15 6.1 Lease of State‐Owned Beds and Banks .....................................................15 6.2 Keno Transfer ..................................................................................15 6.3 Local Community Power ......................................................................15 6.4 Section 401 Water Quality Certification Process .........................................15 6.5 Total Maximum Daily Loads .................................................................16 7.0 Interim Measures Implementation .......................................................................................... 19 7.1 Interim Measures Implementation Committee Meeting Dates and Members ...... 19 7.1.1 Purpose and Goals of the Interim Measures Implementation Committee .. 19 7.2 Interim Conservation Plan Interim Measures and Endangered Species Act Regulatory Process ............................................................................20 7.3 Interim Measure 2: California Klamath Restoration Fund / Coho Enhancement Fund .............................................................................................23 7.4 Interim Measure 3: Iron Gate Turbine Venting ...........................................26 7.5 Interim Measure 4: Hatchery and Genetics Management Plan ........................26 7.6 Interim Measure 5: Iron Gate Flow Variability ............................................29 7.7 Interim Measure 6: Fish Disease Relationship and Control Studies .................... 32 7.8 Interim Measure 7: J.C. Boyle Gravel Placement and/or Habitat Enhancement ..... 33 Implementation Report – August 2018 iii Klamath Hydroelectric Settlement Agreement 7.9 Interim Measure 8: J.C. Boyle Bypass Barrier Removal ..................................34 7.10 Interim Measure 9: J.C. Boyle Powerhouse Gage .........................................34 7.11 Interim Measure 10: Water Quality Conference ..........................................34 7.12 Interim Measure 11: Interim Water Quality Improvements ............................35 7.12.1 Conceptual Feasibility Study of Aeration/Oxygenation Systems at Keno Reservoir ..............................................................................36 7.12.2 Nutrient Removal Methods ........................................................37 7.12.3 Assessment of Potential Algae Harvesting and Removal Techniques at Link River Dam .............................................................................37 7.12.4 Link River Algae Removal Demonstration Project ..............................37 7.12.5 Study of Algal Conditions Management within a Reservoir Cove Using Physical Measure ....................................................................38 7.12.6 Planning and Design for a Demonstration Wetlands Facility Adjacent to the Klamath River ....................................................................39 7.12.7 2014 Localized Treatment of Long Gulch Cove in Iron Gate Reservoir using Hydrogen Peroxide Based Algaecide .............................................39 7.12.8 Research on Microcystis Genotypes in the Klamath River System ........... 39 7.12.9 Multi‐year Analysis of Microcystis Population Structure and Toxigenicity in Copco and Iron Gate Reservoirs ...................................................40 7.12.10 Evaluation of Intake Barrier Systems for Water Quality Improvement from Iron Gate Powerhouse Releases ...................................................41