Form revised May 26, 2009

 

FISCAL NOTE FOR NON-CAPITAL PROJECTS

 

Department:

Contact Person/Phone:

DOF Analyst/Phone:

Seattle City Light

Barbara Greene, 615.1091

Karl Stickel, 684.8085

 

 

Legislation Title:  AN ORDINANCE relating to the City Light Department; authorizing the Superintendent or his designee to enter into a settlement agreement and other related agreements for purposes of relicensing Seattle’s Boundary Dam Hydroelectric Project before the Federal Energy Regulatory Commission; and ratifying and confirming certain prior acts.

 

·         Summary of the Legislation:

 

The proposed Council Bill approves the submittal from Seattle City Light to the Federal Energy Regulatory Commission (FERC) of a comprehensive settlement agreement for the resolution of all proposed mitigation that the City will perform in a new license to operate Boundary Dam. The settlement agreement provides for mitigation efforts in the areas of fisheries, water quality, terrestrial, erosion, recreation, aesthetic and cultural resources. This agreement ensures continued flexibility in the new license to operate as City Light has in the past, allowing the City to continue to offer clean and affordable power to its ratepayers.

 

·         Background:  (Include brief description of the purpose and context of legislation and include record of previous legislation and funding history, if applicable):

 

The Boundary Project (Project) is owned and operated by Seattle City Light under a license administered by the FERC.  The current license was issued in October 1961 and expires on September 30, 2011.  In accordance with the Federal Power Act, Seattle City Light filed an application with FERC for a new 50 year license to operate Boundary Dam on September 29, 2009.  The request for a new license required study and analysis to identify any impacts the Project may have on the surrounding environment, and proposed protection, mitigation and enhancement measures for the Boundary Project.  In addition, Seattle City Light has been engaged in settlement negotiations with the parties and filed a partial settlement agreement with FERC on September 30, 2009. This was accompanied by a motion to request suspension of the FERC licensing timeline to allow the parties to finalize a settlement agreement that will replace the license application.  FERC agreed to this suspension and has extended the timeline to allow Seattle City Light until February 1, 2010 to file a final settlement agreement.

Key Settlement Issues

* No operational changes in new license term;

* Fisheries work in tributaries to allow recovery of target species – bull trout, mountain whitefish, westslope cutthroat trout;

* Reduction in downstream entrainment of listed fish species possible in year 34 of new license (decision by year 18); and

* Provide upstream passage for target species beginning in year 12.

In addition to the settlement agreement, Seattle City Light filed a formal application for relicensing with FERC in September 2009.  The application is the last submittal in the formal FERC relicensing process.  It includes all of the proposed measures for a new 50 year license.  However, the application has less certainty than the settlement agreement process currently proposes.  The FERC process could result in changes to operations based on agencies’ conditioning authority.  The FERC process can also result in contentious post-filing activities extending through spring 2010.  The settlement agreement provides more environmental benefit than the application proposes.

 

Federal laws authorize the United States Forest Service, United States Fish and Wildlife Service and Department of Ecology to prescribe conditions on a new license.  FERC cannot overrule these agencies’ authority.  If settlement agreement fails, there is an appeals process possible through an agency administrative hearing based on material facts in FERC record (EPA2005).  However, it’s important to note that Agency authority is rarely curbed and appeals usually result in a negotiated outcome.  Also, filing such appeals changes relationships and can negatively affect implementation.

 

·         Please check one of the following:

 

___X_ This legislation does not have any financial implications.  

 

Note:   This legislation does not have direct financial implications, but will have significant implied financial implications with respect to implementing a signed settlement agreement, currently being negotiated.  In any case, this legislation does not affect the 2010 adopted budget because mitigation efforts will not begin until FERC issues a new license in 2012.

 

·         What is the financial cost of not implementing the legislation?  (Estimate the costs to the City of not implementing the legislation, including estimated costs to maintain or expand an existing facility or the cost avoidance due to replacement of an existing facility, potential conflicts with regulatory requirements, or other potential costs if the legislation is not implemented.)

 

The settlement agreement includes measures with known cost estimates negotiated with all stakeholders in the relicensing process. They are significantly less than what could occur if the settlement agreement were not submitted to FERC. Without the settlement agreement, FERC will proceed to review the previously submitted license application, and the agencies with mandatory authority would file their prescriptions with FERC. These prescriptions cannot be rejected by FERC and will be much more costly than the settlement costs.

 

·         Does this legislation affect any departments besides the originating department? 

 

No.

 

·         What are the possible alternatives to the legislation that could achieve the same or similar objectives?  (Include any potential alternatives to the proposed legislation, such as reducing fee-supported activities, identifying outside funding sources for fee-supported activities, etc.)

 

There are no other alternatives; Boundary Dam represents up to 40% of Seattle City Light’s generation. Without the settlement agreement, City Light’s costs would rise significantly beginning in 2012 when FERC issues the new license.

 

·         Is the legislation subject to public hearing requirements:  (If yes, what public hearings have been held to date, and/or what plans are in place to hold a public hearing(s) in the future.)

 

No.

 

·         Other Issues (including long-term implications of the legislation):

 

The legislation authorizing Seattle City Light to finalize a settlement agreement for the new license term provides certainty on the protection, mitigation and enhancement measures to be required under the new license. Without this certainty, the Seattle City Light would not know the nature of these measures until FERC issues the new license in 2012. In addition, Seattle City Light would necessarily be involved in trial type hearings with the agencies in 2010 that could result in higher costs for mitigation and strain relationships during the implementation phase.