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NWF.179/May.11.2004
[1] Proposed Hatchery Policy Leaked, But Is It Really News?
[2] Feds To Announce De-Listing Decisions For Eight Fish ESUís Soon
[3] Puget Sound Hatchery Reform Points To Coming Changes In Columbia Basin
[4] Chinook Run Slows: Size Estimate Drops Nearly 50 Percent
[5] Bill Maslen Named To Head BPA's F&W Division
[6] Supreme Court Refuses To Hear Methow Water Case
[7] Ninth Circuit Court Upholds Pesticide Ruling
[8] New Fight Over Dworshak Reservoir Water
[9] BPA's Rate Impact Of Declining Runoff Uncertain

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[1] PROPOSED HATCHERY POLICY LEAKED, BUT IS IT REALLY NEWS?

A story in the April 28th Washington Post claiming that the Bush Administration has decided to count hatchery-bred fish when deciding the status of ESA-listed salmon stocks may be a bit premature. Citing an unreleased draft document, the story said federal officials had confirmed the decision, quoting NOAA Fisheries regional administrator Bob Lohn as saying that both wild and hatchery stocks need to be looked at before deciding whether to list a species.

But a source familiar with the proposed policy said the excerpt leaked to the paper may or may not be part of the final policy expected to be under agency review until sometime in June.

In Post reporter Blaine Harden's story, Lohn said "that the new policy will probably help guide decisions this summer by the Bush Administration."

Though the story generated the predictable strong support from the pro-hatchery camp and negatives from wild-fish advocates, the result was less than real news. After all, Lohn had told a Senate subcommittee last summer that his agency "believes artificial production facilities can make an important contribution to salmon recovery in the Northwest."

If hatchery fish that are genetically similar to wild fish stocks listed under the ESA are counted as part of any stock under review, it's likely that some groups would be proposed for delisting, a process that takes another year to complete.

A new policy has been in the works for nearly two years, forced by the 2001 federal court decision by Oregon District Court Judge Michael Hogan, who found that the feds had illegally interpreted the ESA by not including the hatchery component of the Oregon coastal coho stock for protection along with the wild stock (Alsea Valley Alliance v. Evans). NOAA Fisheries declined to appeal the ruling, but environmental groups did. However, the decision was recently upheld by the 9th U.S. Circuit Court of Appeals.

The day before the story appeared in the Post, NOAA Fisheries spokesman Brian Gorman told NW Fishletter that the new hatchery policy would be published in the Federal Register by late spring. Gorman said part of the hang-up was getting the U.S. Fish and Wildlife Service on board. The USFWS was concerned that by supporting NOAA's new hatchery policy, they would be locked into a new national policy regarding listed aquatic species managed by the agencies.

However, on April 29 Spokane federal Judge Robert Whaley issued an order that gives the federal agency only 30 more days to announce decisions (Building Industry Association of Washington v. NOAA) for eight different stocks petitioned for de-listing in the wake of the Hogan decision.

Several groups of developers, irrigators and property owners claiming economic harm from the current listings took the feds to court last August after the agency exceeded the one-year statutory time limit for deciding on their 2001 petitions. The groups agreed with the government to give NOAA Fisheries until March 31 to complete the process.

After that date came and went, the feds asked for a 90-day extension to give them time to complete their new hatchery policy, which was going to be used as a tool to help in the delisting process. NOAA promised decisions for all 27 listed West Coast salmon and steelhead stocks in three months. But the plaintiffs refused to give them any more time and the issue went back in court.

In an affidavit filed in the BIAW case, Lohn said a new hatchery policy would be out for public review by March 31, explaining to Judge Whaley that a joint task force from the Commerce and Interior Departments had been working to come up with the new policy. "NOAA Fisheries has encountered unexpected difficulty and complexity in developing a new hatchery policy to be applied in making the new listing determinations," he said.

Lohn told the judge there were several challenges, including: developing general standards for evaluating if a hatchery stock is part of the ESU [Evolutionarily Significant Unit] in which it is located; considering the role of hatchery fish in assuring an ESU's survival; analyzing up-to-date information on hatchery effects, both good and bad; and obtaining information on historical and current operations on hundreds of hatchery programs, along with recent changes to various hatchery management plans and purposes.

Early last year, a NOAA Fisheries working group developed four categories for hatchery populations in a draft report on status updates for listed ESUs. The first category included hatchery fish derived from a native, local population and released within the range of that native population that has experienced minor genetic changes "from causes such as founder effects, domestication, or non-local introgression." A second category includes hatchery fish derived from a local population that has experienced a moderate level of genetic changes. Category 3 includes hatchery stocks derived principally from other populations in the same ESU, but "is substantially diverged from the local population in the watershed in which it's released. The last category includes hatchery stocks "predominantly derived from populations that are not part of the ESU in question; or there is substantial uncertainty about the origin and history of the hatchery population."

The document leaked last week says "The presence within an ESU of hatchery fish that are genetically no more than moderately divergent from a natural population in the ESU can reduce the likelihood of extinction of the ESU, and affect a listing determination, by contributing to increasing abundance and productivity of the ESU, by improving spatial distribution, and by serving as a source population for repopulating unoccupied habitat." But the leaked excerpt also says that a hatchery population managed without consideration of conservation effects "can increase the likelihood of extinction of an ESU, and affect a listing determination, by reducing genetic diversity of the ESU and reducing the productivity of an ESU.

So it seems likely that NOAA may opt for counting hatchery stocks from the first two categories developed more than a year ago when tallying ESU abundance.

The new hatchery policy will appear soon, but not before the agency will announce de-listing decisions for eight ESUs (see story 2), according to NOAA Fisheries spokesman Gorman, who said his agency will comply with Judge Whaley's April 29 order and have the decisions ready within 30 days.

Meanwhile, an historic effort to update hatchery practices in the Columbia Basin is just picking up steam, led by staffers from the Northwest Power and Conservation Council. NOAA Fisheries has already said it plans to use the results as part of its salmon recovery program

Another huge effort to reform Puget Sound and coastal Washington hatcheries made headlines recently, weighing in with about 1,000 recommendations for improving things at 100 different facilities, including the call to actually shut some down. The $28 million, four-year project was originally pushed by ex-Sen. Slade Gorton (R-Wash.) and then by Rep. Norm Dicks (D-Wash.), and has gathered the support of federal, state and tribal agencies.

Barbara Cairns, executive director of Long Live The Kings, the group that facilitated the Puget Sound reform effort, said it began as a near-term attempt to help recover stocks and over the longer term to support sustainable fisheries.

NOAA's Lohn endorsed the reform effort as well. "NOAA Fisheries recognizes the Puget Sound and Coastal Washington Hatchery Reform Project is a model for hatchery reform and cooperative fishery management not just in the Pacific Northwest, but for the rest of the nation," he said. --Bill Rudolph


[2] FEDS TO ANNOUNCE DE-LISTING DECISIONS FOR EIGHT FISH ESUíS SOON

NOAA Fisheries spokesman Brian Gorman said last week that his agency will comply with a federal judge's April 29 order (BIAW v. NOAA) that gave the agency 30 days to announce decisions on whether eight different salmon and steelhead stocks qualify for de-listing under the ESA.

"The lion's share of the work has been done and I'm certain we will meet this deadline," Gorman told NW Fishletter May 5.

But Gorman said that didn't mean the agency's long-awaited hatchery policy will be formally announced about the same time, even though he admitted NOAA Fisheries policymakers will be implementing the new policy "in a general way" to help make the decisions on petitions filed by several groups of developers, irrigators and property owners.

When the feds missed an earlier deadline, the groups agreed to a Mar. 31 date for the petitions to be decided, but NOAA missed that one, too, and asked Eastern Washington District Court Judge Robert Whaley for another 90 days, citing delays due to difficulties completing a new hatchery policy. The policy is being developed to satisfy another federal judge's 2001 ruling that said the agency acted illegally when it didn't offer the same ESA protection for the hatchery component of the Oregon coastal coho ESU [Evolutionarily Significant Unit] as it did for the wild part of that run. -B. R.


[3] PUGET SOUND HATCHERY REFORM POINTS TO COMING CHANGES IN COLUMBIA BASIN

The latest flap over the possibility that the federal government will consider the role of hatchery fish when it determines the ESA status of listed salmon stocks has clouded an issue that the region has already been wrestling with for a number of years -- just how do hatchery stocks fit into the new age of the wild fish recovery?

Since fish hatcheries provide 80 percent or more of the salmon and steelhead returning to Northwest waters, it's likely that they do have adverse affects on some listed stocks in some watersheds. But they also provide the backbone of sports and commercial fisheries. The Washington Department of Fish and Wildlife estimates these fisheries are worth more than $1 billion to the state's economy. More than half ($56 million in the 1999-01 biennium) of WDFW's fish program budget pays for hatchery operations.

Reform efforts in both Puget Sound and the Columbia Basin were initiated by congressional action, with some of the same players, like consultant Lars Mobrand, whose firm Mobrand Biometrics is involved in both areas. He chairs a scientific panel that developed a framework for the Puget Sound reform effort and provides technical coordination for the Columbia Basin evaluation which is being led by the Northwest Power and Conservation Council.

Mobrand was part of an April public relations blitz when the latest results of the four-year Puget Sound effort were released just a couple of weeks ago. The report included more than 1,000 recommendations (300 have already been implemented, they say) to improve operations.

"There are hatchery reform efforts in other parts of the country," said Mobrand, "but I know of none with the vision for the future and clearly described actions for immediate change, change that is already underway. This is a new era of hatchery management."

The $28-million effort to reform about a hundred fish hatcheries in Puget Sound and coastal Washington began with a 1999 mandate with two basic policy directions, to reform the facilities to help recover naturally spawning stocks and support sustainable fisheries. The group of scientists assembled to develop a framework agreed that these facilities could be managed to supplement small wild populations.

But that's still an issue that's still being hotly debated in the Columbia Basin, where an attempt to evaluate more than 150 hatcheries began in 1997 when Congress directed the NWPCC to assess current operations with special emphasis developing cost-effective operations, and a report outlining a series of potential reforms and future evaluations was released in April, 1999.

The report focused on developing hatchery operations that reduced possible harmful effects on wild fish, and it took a softer line than its own science panel, acknowledging uncertainty over the value of supplementing wild stocks with hatchery fish. The panel of independent scientists charged with assisting the council took a more skeptical view than the final report or the position of the Puget Sound group. They went on record to say that the value of supplementation is unknown, and benefits uncertain.

Conflicting Mandates

"The current goals and objectives of some hatchery programs don't make sense," said Bruce Suzumoto, the Northwest Power and Conservation Council staffer charged with leading the latest phase of the basin review. "There are too many conflicting mandates," he said, pointing out that some hatcheries were funded to mitigate dam and habitat losses, while others were charged with providing harvest opportunities for ocean fisheries, and now, tribal hatcheries have been funded to boost their own fish stocks.

Suzumoto said some hatchery operations were developed by state mandates, others through the US v. Oregon process, where ongoing Columbia Basin tribal harvest issues are vetted, and now NOAA Fisheries is developing a management plan to minimize adverse genetic effects of hatchery fish on the stocks it is charged with recovering under the mandate of the ESA.

Suzumoto agrees that the region needs to get together to discuss ways to operate hatcheries while minimizing risks to ESA-listed salmon. To that end, the basin hatchery review has surveyed operations to provide data for NOAA Fisheries, which is developing a "cumulative effects" analysis of hatcheries on the listed stocks throughout the Columbia Basin.

But council biologist Suzumoto pointed out that policy conflicts are likely to become even more visible as the subbasin planning process starts looking at individual hatchery operations. He said the hatchery goals developed by each watershed group won't necessarily jibe with the traditional goals of the agencies who have operated them.

The $1.3 million spent so far on the basin-wide evaluation is far less than what is needed to assess the overall impacts of hatcheries on harvest policies and habitat as well, Suzumoto said.

However, judging from comments by state agencies and tribes, setting goals for basin hatcheries won't be easy. Last fall, after the release of the draft basin-level report that found 80 percent of the "segregated" hatchery programs (where only returning hatchery fish are used for broodstock) in the basin contributed more than 5 percent of the naturally spawning hatchery fish to neighboring wild stocks, the Oregon Department of Fish and Wildlife pointed out that "setting goals consistent with current biological, economic and cultural and legal requirements is not a simple task, as these values are rarely in agreement."

The Columbia River Inter-Tribal Fish Commission criticized the APRE [Artificial Production Review and Evaluation] draft for focusing "on elements of animal husbandry rather than on meeting Columbia Basin goals." They also pointed out that the harvest discussion was "incomplete" and lacked a tribal perspective on how their fisheries are managed.

CRITFC also took issue with the approach in the Puget Sound review "being fostered" on the Columbia system. "The two areas have different constraints on population health, and the approaches proposed in the Puget Sound may not work on the Columbia River system. From the Commission's perspective, the use of the hatchery-reared salmon to simply feed various fisheries will reduce the resources available for using hatcheries to restore naturally spawning stocks."

CRITFC said mass marking of hatchery steelhead has been going on for more than 20 years without showing any benefits or conservation value to naturally spawning stocks. The tribes said that the original hatchery programs were designed to feed ocean and lower Columbia non-Indian fisheries, but that objective has changed to provide most benefits to sports fisheries where hatchery fish marked by a clipped adipose fin are targeted for harvest. But they say the APRE draft doesn't discuss mortality associated with unmarked fish, presumably wild ESA-listed stocks, that are released in those fisheries.

BPA weighed in on the Puget Sound v. Columbia Basin issue as well, suggesting that the APRE draft "might be improved" by better "delineation" between the objectives of the Puget Sound review process and the APRE objectives. Noting that the APRE review was more than five years' late, they said Congress gave a "substantively different" mandate for the basin's review, which included a request for developing a cost-effective hatchery policy. Congress' request for a recommendation of a coordinated hatchery policy, or how to obtain one, also hasn't been completed, said BPA.

But a new policy eventually blessed by NOAA Fisheries is the ultimate goal and it's likely to lead to a major overhaul of the basin's traditional hatchery operations, though some improvements are already in the works.

The Puget Sound reform effort has already led to the end of some hatchery programs, and others have been modified to reflect a better understanding of how hatcheries fit into the ecosystem. To settle disputes among co-managers over other contentious issues, a process has been developed to help resolve these differences.

NOAA regional administrator Bob Lohn has endorsed the Puget Sound effort, calling it a model for hatchery reform and cooperative fishery management. His agency is still working to complete the hatchery and genetic plans for Columbia Basin facilities, beginning a third round of workshops in late March. -B. R.


[4] CHINOOK RUN SLOWS: SIZE ESTIMATE DROPS NEARLY 50 PERCENT

With little rain to coax fish upriver, the numbers of spring chinook swimming up the Columbia River have remained lackluster at best. The count barely reached 137,000 fish by May 9, a mere 29,000 fish above the 10-year average. With great returns over the past few years, it's hard to remember just how poor things have been. In 1995, the spring run never hit 18,000.

This year's run likely started late, anyway, according to basin fish managers. Two weeks ago, the technical advisory committee that provides the estimates said if the run was late, then it was still too early for them to provide a precise update to the 360,000-fish pre-season estimate for the number of spring chinook entering the mouth of the river. However, for management purposes, the managers lowered their estimate to 312,000 fish.

On May 3, they dropped that estimate to 200,000 fish and closed the river to sports fishing all the way to McNary Dam. They had already closed sports fishing from the I-5 bridge to Bonneville Dam. So far, sporties have caught nearly 24,000 chinook, close to their allocation. Commercial non-Indian fishermen had landed about an equal amount.

Commercial tribal gillnetting began May 4 above Bonneville Dam, where about 22,000 chinook were caught in last year's spring fisheries. This year, the tribe will be allowed to take 10 percent of the 200,000 estimate. If the original estimate had panned out, they would have been able to catch 13 percent of the run, which includes chinook caught in platform and ceremonial fisheries.

More than half of the springers passing Bonneville Dam are expected to be heading to Idaho. By May 9, about 40,000 chinook had been counted at Lower Granite Dam, about twice the 10-year average. -B. R.


[5] BILL MASLEN NAMED TO HEAD BPA'S F&W DIVISION

The Bonneville Power Administration announced last week that longtime agency biologist Bill Maslen will be the new director of fish and wildlife program policy. Maslen has worked on Columbia Basin fishery and hydropower issues for more than 25 years, including nine years with the Corps of Engineers.

During that time, Maslen played key roles in spill passage and gas bubble disease research, implementing the pikeminnow reduction program, studying avian predation and adult passage issues.

"Bill's many years of broad experience as a biologist with regional fish and wildlife issues make this new role an ideal fit for him and BPA," said BPA chief operating officer Ruth Bennett. "In addition, his strong interpersonal skills, as well as his integrity and objectivity, will be of tremendous value in enhancing partnerships for achieving fish and wildlife objectives in the region." -B. R.

[6] SUPREME COURT REFUSES TO HEAR METHOW WATER CASE

The US Supreme Court has refused to hear an appeal that challenged a decision by Spokane federal judge Robert Whaley that upheld action by the US Forest Service to cut private irrigation water that flowed through ditches on government property out of concern for ESA-listed fish in northeast Washington's Methow Valley.

"This decision affirms what we have said all along," said attorney John Arum, representing Earthjustice, an intervenor in the case. "The Forest Service can protect salmon by conditioning the use of its land on protecting stream flows."

The Pacific Legal Foundation had already appealed and lost last August in the Ninth Circuit Court before it took the case all the way to the Supreme Court. After that ruling, PLF attorney Russell Brooks said it was a big issue for Western water law, "At issue is whether the feds can control water across federal lands."

The Early Winters Ditch Company and Okanogan County, along with several private landowners, originally sued the U.S. Forest Service for reducing the flow of water across federal forest land to private irrigators. The federal agency said it needed to save water for steelhead and spring chinook listed under the Endangered Species Act.

However, the water in question had been flowing through the ditches long before the Forest Service took charge of the federal land in question or required any type of permit that allowed a right-of-way.

The plaintiffs had argued that restricting the flow was an infringement of water rights granted long ago by the state, but a three-judge panel upheld the lower court ruling that said the ditch rights-of-way permits granted by the Forest Service were subject to ESA considerations.

Attorney Brooks said the government characterized the case as being based on the Forest Service's land-use permit. "We characterized it in another way," said Brooks, "as a regulated use of water." But the Ninth Circuit ruling said that federal statutes gave the Forest Service "authority to maintain certain levels of flow in the rivers and streams within the boundaries of the Okanogan National Forest to protect endangered fish species." -B. R.

[7] NINTH CIRCUIT COURT UPHOLDS PESTICIDE RULING

The Ninth Circuit Court has refused to set aside a January ruling by a federal judge in Seattle that ordered an end to the spraying of certain pesticides near salmon streams while the decision is being appealed.

"The pesticide industry overreached its effort to block protections for salmon," said Earthjustice attorney Patti Goldman. She said the injunction was clearly warranted to keep pesticides out of streams while EPA complies with the ESA and develops permanent protections for salmon.

The injunction called for no-spray zones for aerial application of more than 30 pesticides within 100 yards of streams bearing ESA-listed fish, and a 20-yard buffer for ground application. Judge John Coughenour also ruled that in-store warnings be displayed to inform consumers about possible harmful effects of pesticides on salmon. -B. R.

[8] NEW FIGHT OVER DWORSHAK RESERVOIR WATER

A new water squabble took shape last week, as federal agencies in the Columbia Basin took a closer look at draining more water from an Idaho reservoir to offset fish losses for a proposed reduction in summer spill at mainstem dams. The agencies had expected to announce a final "amended" proposal by April 21, but after fielding more comments from state agencies and tribes, the process to refine offsets for both ESA listed and non-listed fish stocks has dragged on.

It may take another week or two before it's ready, said BPA spokesman Mike Hansen. The main elements of the proposed offsets, increasing the pikeminnow bounty program, and reducing fluctuations in the Hanford Reach, are still not completed, and a deal to reduce harvest in the lower river hasn't been worked out. Washington has also asked BPA to pay millions for hatchery improvements as part of the three-year spill evaluation that BPA hopes could save about $45 million a year.

A new analysis by NOAA Fisheries trotted out at last week's IT [Implementation Team] meeting in Portland suggests that adverse impacts to fall chinook could be greater than earlier estimates--especially in a low flow year--and by drafting another 20 feet out of Dworshak Reservoir juvenile fish survival could be boosted in early September by adding cool water from the Clearwater to the lower Snake.

Dworshak
Idaho's Dworshak Reservoir on the way down.
(photo courtesy COE)
As usual, Dworshak reservoir water was used last year to augment flows and reduce temperatures for ESA fish in the Snake, which meant the reservoir level declined by about 85 feet between July and September, a strategy that has had local residents furious for years. It's one of the salmon recovery strategies cemented into the hydro BiOp.

The latest salmon math from NOAA Fisheries is still in what critics call the "decimal dust," or margins of error bounds, but it suggests that if the reduced spill proposal had been in place when the 2002 returning adults (2,116 wild falls) migrated "typically" to sea, 18 to 40 less adults would have returned. If the juvenile migration had been late, 21 to 45 less fall chinook would have returned. Adverse effects on hatchery fish from Lyons Ferry were estimated at about twice the rate of wild fish. But with thousands more of them returning (7,831 fish in 2002) than from the wild component, NOAA estimated a 100-fish to 270-fish loss, depending on whether the juvenile run migrated early or late.

The NOAA Fisheries draft analysis of the extra Dworshak draft estimates the number of Snake River fall chinook saved by the 20-foot release "would likely offset the adverse effect of the reduced spill operation." But the analysis estimates that during a typical juvenile migration only 1 percent of the fall run is passing through during the first two weeks in September.

The analysis said the draft would provide more benefits in years when the migration is late, when up to 4 percent of the run passes during that two-week time frame. However, In the past nine years, the migration has appeared late only once.

In years when the migration is early, which occurs about one-third of the time, the analysis said there would be no survival benefit at all.

A Corps of Engineers' analysis distributed at the same time, said the cool water from Dworshak takes about two weeks to get to Lower Granite to do much good, when it can reduce water temperatures by about 3.4 degrees F.

"If the goal is to avoid exceedences of the 68 degree standard, this can be done without the increased draft of the Dworshak reservoir," says the Corps' analysis, by releasing water more evenly from the reservoir in July and August.

The Dworshak draft has turned quickly into a political football, with Orofino, Idaho, the center of the region's recreational activities, the focal point for complaints about losing another 20 feet of the reservoir's elevation. "It makes it even tougher to re-fill," said Sandy Medley, executive director of the Orofino Chamber of Commerce. Though BPA has offered to spend $1.5 million to fund a core project that would pay for extending boat ramps, including $425,000 for a Nez Perce project to survey cultural resources, Medley said Orofino residents would rather have the water.

"We'll be meeting with Bob Lohn (NOAA fisheries), the Corps and BPA to see where we stand," said Medley.

Idaho's attorney general Michael Bogert, in an April 7 letter to BPA, said the state has "serious reservations" about the strategy. He said that not only would increased draft of the reservoir make it more difficult to fill up again in the spring, a 2000 study by Idaho's own Department of Water Resources found that increased flows from Dworshak had "a negligible impact on anadromous fish."

Judi Danielson, chair of the Northwest Power and Conservation Council, said she and fellow Idaho representative Jim Kempton supported the local folks and were backed up by Idaho's congressional delegation.

The NOAA analysis also looked at a proposal by Oregon and Washington fish managers to augment July flows in the lower Snake by adding another 100,000 acre-feet from Brownlee Reservoir. It estimated the survival benefit to juvenile salmon on the order of 1.5 percent. -B. R.

[9] BPA'S RATE IMPACT OF DECLINING RUNOFF UNCERTAIN

Runoff figures for the Columbia and Snake Rivers continue to look dismal, but the Bonneville Power Administration says there are too many other factors in play to draw any conclusions about where its rates will go come next October. "We haven't got a clue," said BPA spokesman Bill Murlin.

January-through-July runoff at the Dalles was projected at 79.5 million acre-feet, or 74 percent of the 30-year average. Northwest federal dams operated by the Army Corps of Engineers generated only 3700 GWh [billion watt-hours] in February, less than 70 percent of average. BPA's secondary revenue is also taking a hit. As runoff has declined by over 20 MAF since the last quarterly review, secondary revenue projections have come down $90 million.

Herald Opitz, hydrologist in charge at the Northwest River Forecast Center, said the 81.6 MAF figure from the May earlybird forecast would make 2004 the fifth worst runoff year since 1961. A revised forecast out last Friday cut the water supply even more, down to 79.5 MAF.

According to the NRFC's monthly summary, "Basinwide snow water equivalents on May 1st range from 85 percent in the Upper Columbia in Canada to 40 to 50 percent on the east slopes of the Cascades in Washington, The Big and Little Wood basins and Lost river in Idaho and on the Malheur and Owyhee rivers in Oregon."

The poor runoff is the result of too much annual precipitation falling early in the year and too little falling too late. Region-wide, precipitation for the October-through-April period ranged between 80 percent and 108 percent, but most of that fell in October, November, and December, while the normal months of accumulation--February through May--were much drier. Precipitation for April, for example, came in between 60 percent and 70 percent of normal as of April 26, Opitz noted. Hence, most of the precipitation fell as rain and didn't get stored as snow, leading to the low runoff volumes.

BPA's recently released second quarter review forecast $3.31 billion in total FY 2004 revenue, compared to the agency's $3.43 billion target. But its forecast expenses, $2.89 billion, are also down from a target of $3.04 billion target. Modified net revenues (excluding the effect of non-federal debt management and SFAS 133) for FY 2004 are projected at $40.6 million, compared to the $145 million target. Last year, BPA's total revenues came to $3.56 billion, and its modified net revenues to $36.9 million.

"The major reason for the decline in agency finances is the dry spring," Murlin said, adding that, so far BPA has been able to meet all its contract loads because the uncertainties of the coming season have not yet affected BPA's power purchase decisions.

If it were just a function of water, the pressure on BPA's wholesale rates would plainly be upward, Murlin said. But BPA has too many balls in the air at the moment to know how things will play out. A BPA/Customer collaborative is still working on cost cutting ideas that could lower the upward pressure by at least $100 million. And a proposed deal--"settlement lite"--to close out a drawn-out dispute over IOU benefits may come to fruition in the next few weeks, also reducing BPA's current rate period costs by over $100 million. In addition, a federal decision to end summer spill--itself an "iffy" proposition, Murlin noted--could help, but if runoff continues to decline, the benefit for rates will too.

With the three cost recovery adjustment clauses in effect, BPA's average rates are currently 47 percent over the base set in May 2000. That is scheduled to increase to 52 percent Oct. 1, not counting the impacts of the above listed uncertainties. -Ben Tansey

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