[Senate Report 112-110]
[From the U.S. Government Publishing Office]
Calendar No. 272
112th Congress Report
SENATE
2d Session 112-110
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BONNEVILLE UNIT CLEAN HYDROPOWER FACILITATION ACT
_______
January 13, 2012.--Ordered to be printed
Filed, under authority of the order of the Senate of December 17, 2011
_______
Mr. Bingaman, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 499]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 499) to authorize the Secretary of the
Interior to facilitate the development of hydroelectric power
on the Diamond Fork System of the General Utah Project, having
considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
PURPOSE
The purpose of S. 499 is to authorize the Secretary of the
Interior to facilitate the development of hydroelectric power
on the Diamond Fork System of the Central Utah Project.
BACKGROUND AND NEED
The Central Utah Project was authorized in 1956 as part of
the Colorado River Storage Project Act. The Bonneville Unit is
the largest unit of the Central Utah Project. The Diamond Fork
System is a completed project within the Bonneville Unit and is
located in Utah County, Utah. Pursuant to the Central Utah
Project Completion Act of 1992 (CUPCA) (Public Law 102-575),
the Central Utah Water Conservancy District is responsible for
completion of the Central Utah Project, including the
Bonneville Unit.
Hydropower development on Central Utah Project facilities
was authorized as part of the original Colorado River Storage
Project Act of 1956 (Public Law 84-485). The 2004 Supplement to
the 1988 Definite Plan Report for the Bonneville Unit and the
2004 Utah Lake Drainage Basin Water Delivery System Final
Environmental Impact Statement detail the proposed power
facilities that could be developed within the Diamond Fork
System, which include two hydroelectric power plants. It is
estimated that the Diamond Fork project has the capability to
generate up to 50 megawatts of hydroelectric power.
The Colorado River Storage Project Act requires that
project costs be allocated for repayment by power generation
and, as a result, any non-federal developer of power within the
Diamond Fork system would be responsible for payment of those
costs prior to initiation of power production. S. 499 provides
that the project costs would be permanently deferred under the
same terms as certain municipal and industrial costs are
allowed to be deferred under section 211 of CUPCA so long as
the Central Utah Water Conservancy District complies with
certain water management requirements.
LEGISLATIVE HISTORY
Senator Hatch introduced S. 499 on March 7, 2011. The bill
is co-sponsored by Senator Lee. The Subcommittee on Water and
Power of the Committee on Energy and Natural Resources held a
hearing on S. 499 on May 19, 2011 (S. Hrg. 112-63). The
Committee on Energy and Natural Resources ordered S. 499
favorably reported without amendment at its business meeting on
November 10, 2011.
The Committee on Energy and Natural Resources considered
similar legislation during the 111th Congress, S. 1758,
sponsored by Senators Bennett and Hatch, and H.R. 2008,
sponsored by Representative Matheson, which passed the House of
Representatives by voice vote on June 8, 2010. The Subcommittee
on Water and Power held a hearing on S. 1758 on November 5,
2009 (S. Hrg. 111-339). The Committee on Energy and Natural
Resources considered H.R. 2008 at its business meeting on June
16, 2010, and ordered the bill favorably reported without
amendment at its business meeting on June 21, 2010.
COMMITTEE RECOMMENDATION
The Senate Committee on Energy and Natural Resources, in
open business session on November 10, 2011, by a voice vote of
a quorum present, recommends that the Senate pass S. 499.
SECTION-BY-SECTION ANALYSIS
Section 1 identifies the short title of the bill as the
``Bonneville Unit Clean Hydropower Facilitation Act''.
Section 2 defines the Diamond Fork System as the facilities
described in chapter 4 of the October 2004 Supplement to the
1988 Definite Plan Report for the Bonneville Unit.
Section 3 provides that the current amount of reimbursable
costs allocated to project power for the Diamond Fork System
shall be the final costs.
Section 4 provides that nothing in the Act shall obligate
the Western Area Power Administration to purchase or market any
of the power produced by the Diamond Fork power plant and that
none of the costs associated with development of transmission
facilities to transmit power from the Diamond Fork power plant
shall be assigned to power for the purpose of Colorado River
Storage Project ratemaking.
Section 5 prohibits the use of tax-exempt financing to fund
any facility for the generation or transmission of
hydroelectric power on the Diamond Fork System.
Section 6 requires the Secretary of the Interior to report
to the Committee on Natural Resources of the House of
Representatives and the Committee on Energy and Natural
Resources of the Senate if hydropower production on the Diamond
Fork System has not commenced within twenty-four months after
the date of enactment and to supply a detailed timeline for
future hydropower production.
Section 7 contains language complying with the Statutory
Pay-As-You-Go Act of 2010.
Section 8 provides that the authority under the provisions
of section 301 of the Hoover Power Plant Act of 1984 (Public
Law 98-381; 42 U.S.C. 16421a) shall not be used to fund any
study or construction of transmission facilities developed as a
result of the bill.
COST AND BUDGETARY CONSIDERATIONS
The Congressional Budget Office estimate of the costs of
this measure has been requested but was not received at the
time the report was filed. When the Congressional Budget Office
completes its cost estimate, it will be posted on the Internet
at www.cbo.gov.
REGULATORY IMPACT EVALUATION
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 499.
The bill is not a regulatory measure in the sense of
imposing Government-established standards or significant
economic responsibilities on private individuals and
businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 499, as ordered reported.
CONGRESSIONALLY DIRECTED SPENDING
S. 499, as reported, does not contain any congressionally
directed spending items, limited tax benefits, or limited
tariff benefits as defined in rule XLIV of the Standing Rules
of the Senate.
EXECUTIVE COMMUNICATIONS
The testimony provided by the U.S. Department of the
Interior, Bureau of Reclamation at the May 19, 2011
Subcommittee hearing on S. 499 follows:
Statement of David Murillo, Deputy Commissioner, Operations, Bureau of
Reclamation, Department of the Interior
Madam Chairwoman and members of the Committee, I am David
Murillo, Deputy Commissioner for Operations of the Bureau of
Reclamation. I am pleased to be here today on behalf of the
Assistant Secretary for Water and Science who oversees the
Central Utah Project Completion Act activities to present the
Administration's views on S. 499, the Bonneville Unit Clean
Hydropower Facilitation Act. The proposed legislation is
associated with development of hydropower on the Diamond Fork
System, Bonneville Unit, Central Utah Project.
The Central Utah Project Completion Act (CUPCA) provides
for the completion of the construction of the Central Utah
Project (CUP) by the Central Utah Water Conservancy District
(CUWCD). CUPCA also authorizes programs for fish, wildlife, and
recreation mitigation and conservation; establishes an account
in the Treasury for deposit of appropriations and other
contributions; establishes the Utah Reclamation Mitigation and
Conservation Commission to coordinate mitigation and
conservation activities; and provides for the Ute Indian Water
Rights Settlement.
Hydropower development on CUP facilities was authorized as
part of the Colorado River Storage Project Act (CRSPA) under
which the Central Utah Project is a participating project. The
development of hydropower on the Diamond Fork System has been
contemplated since the early days of the CUP. The 1984
Environmental Impact Statement on the Diamond Fork System
described the construction of five hydropower plants with a
combined capacity of 166 MW of power.
However, these hydropower plants were never constructed and
the 1999 Environmental Impact Statement on the Diamond Fork
System presented a plan which specifically excluded the
development of hydropower, stating ``there are no definite
plans or designs, and it is not known if or by whom they may be
developed.''
Although hydropower development was not included,
construction of pipelines and tunnels for the Diamond Fork
System were completed and put into operation in July 2004.
Under full operation the Diamond Fork System will annually
convey 101,900 acre-feet of CUP Water and 61,500 acre-feet for
Strawberry Valley Project water users.
In 2002 CUPCA was amended to authorize development of
federal project power on CUP facilities. With this new
amendment, plans for hydropower development at Diamond Fork
were included in the 2004 Utah Lake System Environmental Impact
Statement and the 2004 Supplement to the Definite Plan Report
for the Bonneville Unit (DPR). These documents describe the
construction of two hydropower plants on the existing Diamond
Fork System for a total generating capacity of 50 MW.
Section 208 of CUPCA included provisions that power on CUP
features would be developed and operated in accordance with
CRSPA and CUP water diverted out of the Colorado River Basin
for power purposes would be incidental to other project
purposes.
There are two options for hydropower development on the
Diamond Fork System: 1) federal project development or 2)
private development under a Lease of Power Privilege contract
with the United States.
Under the first option the CUWCD would construct the
Diamond Fork hydropower plants under contract with the United
States and contribute an upfront local cost share of 35 percent
of the construction costs. In addition to the hydropower plant
construction costs, the costs of conveyance facilities upstream
of Diamond Fork System that are allocated to power would have
to be repaid. The DPR allocates costs of the CUP according to
project purposes. The reimbursable costs allocated to power are
$161 million based upon the costs of developed features
upstream of the Diamond Fork System. It is anticipated that
under this option, these allocated costs would be repaid
through an arrangement among Interior, CUWCD, and the Western
Area Power Administration (WAPA).
Under the second option, private hydropower could be
developed. Although the DPR and 1999 EIS describe federal
hydropower development, they also provide the option for a
Lease of Power Privilege arrangement with the United States.
Under this arrangement Interior would implement a competitive
process to select a lessee for private development of
hydropower at Diamond Fork. The lease arrangement would require
repayment of the $161 million of upstream costs plus annual
payments to the United States for the use of the federal
facilities, amounting to at least a 3 mil rate paid by the
lessee to the United States.
S. 499 does not preclude federal development of hydropower,
but it does increase the likelihood of private development. If
enacted, this bill would indefinitely defer the $161 million in
costs allocated to power development in the Diamond Fork System
under section 211 of CUPCA, thus reducing the cost of
hydropower development at this site. This bill would increase
the likelihood that a private developer would pursue a Lease of
Power Privilege arrangement because the private developer would
not, under this legislation, be required to repay the $161
million of construction costs that were allocated to power as
would be required under existing law.
We understand and appreciate the goal of this legislation
of facilitating the development of hydroelectric power on the
Diamond Fork System.
However, the Administration has serious concerns about
losing our ability to recoup the Federal investment made in
these facilities as set forth in this legislation. The Federal
government may benefit in the medium term from the annual
payments for the use of Federal facilities that would be paid
if a lessee entered into a Lease of Power Privilege arrangement
for production of hydroelectric power on the Diamond Fork
System. Assuming only a summer water supply as under current
deliveries, these payments are estimated at about $400,000 a
year starting the year that the project is completed and
continuing for the life of the project. However, because
payment of $161 million of allocated power costs would be
postponed indefinitely, it is unclear what the long-term fiscal
implications of enactment of this legislation would be and how
the United States Treasury would be made whole. This
legislation would potentially permanently postpone anticipated
receipts to the U.S. Treasury at the expense of the Federal
taxpayer. While it is not clear at this time whether a
nonfederal developer would propose a hydroelectric project at
Diamond Fork under current law, if this were to occur,
repayment of the allocated power costs would begin after the
hydroelectric project is completed and average $5.3 million a
year for 50 years.
Section 5 of S. 499 would prohibit the use of tax-exempt
financing to develop any facility for the generation or
transmission of hydroelectric power on the Diamond Fork System.
This provision was added to the bill to prevent any loss of
revenue to the federal government as a result of the financing
mechanism used for development of hydropower at this site.
This concludes my testimony. I am happy to answer any
questions.
CHANGES IN EXISTING LAW
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee notes that no
changes in existing law are made by S. 499, as ordered
reported.