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1999 Friends of Lake Powell, Inc.
www.lakepowell.org
P.O. Box 7007
Page, AZ 86040 USA
(928) 645-2741  Fax: 928-353-2227

Prepared Statement of
Michael S. Hacskaylo
Acting Administrator
Western Area Power Administration
U.S. Department of Energy

Before the
Subcommittee on Water and Power
and
Subcommittee on National Parks and Public Lands
Committee on Resources
United States House of Representatives

Mr. Chairmen, and members of the subcommittees, I appreciate the opportunity to appear before you today to discuss the power-related impacts of draining Lake Powell or reducing its water storage capability, and the effect on Federal power revenues.

I will begin by telling you about the agency I represent, and its involvement with Glen Canyon Dam, which created Lake Powell. Glen Canyon Dam is one of several Federal dams on the upper Colorado River and its tributaries that comprise the multi-purpose Federal water project known as the Colorado River Storage Project (CRSP). Western Area Power Administration (Western) is the Federal agency charged with marketing the hydropower generated by the CRSP. Six Federal powerplants are located at CRSP dams, with a total maximum operating capability of 1,801 megawatts (MWs). The largest, by far, is the powerplant at Glen Canyon Dam, with a maximum operating capability of 1,356 MWs.

Western has integrated the power generated by the CRSP powerplants with power from several small hydropower generators on irrigation projects that utilize CRSP water, and with power from the Coilbran and Rio Grande Projects (two other Federal water projects in western Colorado and central New Mexico, respectively). Western markets the combined resource as Salt Lake City Area/Integrated Projects (SLIP) power. SLIP power is allocated to over 100 municipal utilities, rural electric cooperatives, irrigation districts, and Federal and state agencies in the states of Utah, Colorado, New Mexico, Arizona, Nevada, and Wyoming. For the most part, CRSP electrical power is supplied to the states' rural areas. A total of 1,314 MWs of SLIP power is allocated for summer use and 1,407 MWs of power for winter use under 15-year contracts expiring in the year 2004. Western sold 7.2 billion KWhs of firm and nonfirm SLIP power in FY 1996, generating $126 million in revenues. Of these amounts, approximately 5.5 billion - KWhs and $93 million can be attributed to Glen Canyon generation.

Draining Lake Powell, or drastically reducing the reservoir's storage capability, would essentially eliminate hydropower generation from Glen Canyon Dam. To meet existing demand for electrical energy, SLIP power customers would need to substitute other resources for their lost power. Studies associated with the environmental impact statement on the operation of Glen Canyon Dam show that energy conservation may be able to replace up to 20% of Glen Canyon Dam generation. The remainder of the lost generation would most likely come from fossil- fired powerplants.

Substituting higher-cost and relatively more polluting fossil-fired generation for clean and inexpensive hydropower has negative consequences. One adverse impact of replacing CRSP hydropower with fossil-fired power generation would be an increase in air pollution.

Hydropower creates no air pollution, whereas fossil-fired(esp. coal- fired) power generation is a contributor to air emissions. Another consequence of the loss of Glen Canyon power is the likely adverse financial impact on the areas served by the CRSP customers. Retail rate increases would vary considerably among CRSP customers because of differences in how much electrical power they buy from Western and the price they have to pay for power from their other suppliers.The U.S. Treasury account into which CRSP power revenues are deposited serves as the source of funds for the Grand Canyon Monitoring and Research Center's $7 million annual budget, most of the base funding for the $3 million Upper Colorado Recovery Program for Endangered Fish Species, and such diverse other projects as the Upper Colorado River Basin Salinity Program and the proposed privatization of the Bureau of Reclamation town of Dutch John, Utah. The environmental studies in the Grand Canyon cost over $100 million since 1981 and were financed by this account. Although power customers were responsible for reimbursing only a portion of these costs through their rates, in the absence of power revenues, alternative financing sources will need to be found for several of these programs if Glen Canyon power revenues end, or these programs will have to be sharply curtailed.

Terminating Glen Canyon Dam's hydropower generation would also have impacts on the U.S. Treasury and the Federal government's budget deficit. At present, revenues from the sale of CRSP power repay the Federal government for the expense of generating and transmitting this power, including power's share of the capital cost of the dam itself, and interest on all investments allocated to power. Without generation from Glen Canyon Dam's powerplant, it will be impossible for the remaining CRSP power to be sold at a price that recovers all costs -- leaving U.S. taxpayers unreimbursed for their investment in the dam and its associated power facilities. As of the end of FY 1996, $503 million of in-service CRSP power facilities had yet to be repaid, along with $41 million of construction=work-in-progress investments.

Moreover, CRSP power revenues are responsible for repaying most of the costs of the Federal investment in CRSP participating irrigation facilities. As of the end of FY 1996, CRSP power revenues are to repay $801 million in irrigation investments which are currently in service. Revenue from the remaining CRSP powerplants will be inadequate to repay the U.S. Treasury for these costs. Therefore, another impact of draining Lake Powell would be the Federal government's failure to recover $801 million of those irrigation projects which are already in service.

In sum, over the next 50 years, the Federal government can expect to undercollect over $1.3 billion, compared to current revenue estimates, from a decision to drain Lake Powell.

This concludes my testimony. I would be happy to respond to any questions you may have.

For more information contact. friends@lakepowell.org