Treaty with Canada costs Northwest ratepayers millions of dollars

In 1964, the Beatles first appeared on the Ed Sullivan Show, Ford built the Mustang, “Bonanza” and “Bewitched” were the top TV shows and Lyndon Johnson was elected President of the United States. Less memorable but still impactful today, a treaty was signed between the U.S. and Canada that is costing American electricity customers in the Northwest hundreds of millions of dollars a year.

The treaty guided the development and operation of the 1,200-mile long Columbia River, whose headwaters are located in British Columbia. It also divided the benefits.

“The treaty has served both nations well for decades, but after nearly 50 years, it is time to strike a better bargain,” Sen. Ron Wyden, (D-Oregon) told the Senate Energy and Natural Resources Committee recently. Wyden wants to renegotiate the Columbia River Treaty. A provision in the treaty allows either Canada or the U.S. to opt out, with ten years notice. The first opportunity for notice is Sept. 2014, 50 years after the deal was signed.

Under the agreement, Canada built huge storage dams on the upper Columbia and the U.S. agreed to pay Canada for downstream benefits, such as maximum generation of hydro-electric power.

“The treaty was drafted based on the outdated assumption that U.S. hydro-generation would be operated to maximize power production,” said Wyden. “That has not been the case for decades.” As a result, the Bonneville Power Administration calculates that the U.S. is overpaying Canada by $250 million to $350 million a year based on what Canada contributes to river operations.

“For every dollar that we send north, we receive about ten cents worth of value,” claimed George Caan with the Washington Public Utility District Association. “The treaty is the only vehicle we have available to balance this entitlement.”

Rather than negotiate or leave it as is, Wyden knows that some utilities favor the drastic step of terminating the treaty.

“These excess payments to Canada come out of the pockets of hard-hit Northwest ratepayers at a cost of hundreds of millions of dollars each and every year.”

It’s likely that most of us are not familiar with the details, but Senator Maria Cantwell, (D-Washington) said that the treaty impacts everybody.

“Everywhere across the Pacific Northwest, the tribes, farmers, businesses, everyone is very concerned about this treaty and what happens next.”

The British Columbia government, naturally, takes a different view about the value of the treaty. While leaders imply that Canada is willing to negotiate, B.C. Energy Minister Bill Bennett thinks that the 1964 deal has significant value, “perhaps more than we are receiving today.”

Idaho Senator James Risch thinks it will be tough to make a new deal.

“I think that this is going to be a really heavy lift to get the Canadians to try to do something about this, I mean if I was sitting on the other side of the border, I’d look at this and say: ‘Guys, look, here’s the treaty, where’s my check?'”

But Canada has reason to discuss the treaty. Fish were not an issue in 1964 and now Canada wants to restore salmon runs in southeast B.C., among other cross-border concerns. U.S. negotiators would also like to formalize salmon protection, river health, global warming and other similar issues in any new agreement, as well as cut a better deal for U.S. ratepayers.

“The world has changed since 1964 and so must the treaty,” said Dr. Tom Karier, Washington State councilmember with the Northwest Power and Conservation Council.

The B.P.A. and the U.S. Army Corps of Engineers are expected to give Congress recommended treaty revisions in December.