After revising cost estimates, beefing up financial assurances, getting extensions from funding sources and changing its timeline, the Klamath River Renewal Corporation is again asking the Federal Energy Regulatory Commission to transfer the license for four lower Klamath River Dams so that the process to remove them can move forward.
On July 29, the nonprofit group that was formed to remove the dams submitted answers to questions posed by FERC and an independent Board of Consultants, including 12 attachments detailing their work.
The filing supplements KRRC's Definite Plan, submitted to FERC last summer.
"Our submission to FERC today proves that we understand the magnitude of our charge and are on the right path," Mark Bransom, KRRC CEO, said in a prepared statement. "We have the funding, the team, the expertise and the plan to do it right and pen a vibrant new chapter of the Klamath River history."
A plan to decommission, remove the dams and restore the lower Klamath River was part of the 2016 Klamath Hydroelectric Settlement Agreement (KHSA), to be funded by a $250 million California bond, and $200 million in PacifiCorp surcharges to California and Oregon customers.
Under its Definite Plan, KRRC estimated its "most probable" costs at $397.7 million.
The updated "conservative industry standard" cost estimate of $433.7 million still comes within its $450 million budget, and includes all expenditures to date, along with future planning, oversight, construction, mitigation, insurance, bonds, indemnification and project contingencies, the filing states.
The estimate also includes a $16.3 million cash reserve and a $62.8 million risk contingency.
It's "the most comprehensive risk management program ever considered by FERC for purposes of dam removal," a KRRC news release said.
Environmental groups applauded the filing, and urged FERC to approve the license transfer, first requested by PacifiCorp and KRRC in September 2016.
"KRRC has clearly demonstrated it has the financial capacity and implementation skill set to be licensee. We strongly encourage you to act favorably on the application," 34 conservation groups stated in a joint letter to FERC on July 30.
PacifiCorp--which is jointly seeking the license transfer with KRRC--filed a letter on July 31 emphasizing key aspects of the settlement agreement, pointing to reviews of that agreement by Oregon and California PUCs, and asking FERC to "expeditiously" transfer the license.
"That approval is a critical component of the KHSA and constitutes a core protection for PacifiCorp's customers," the letter stated.
Humboldt County, which also signed the amended settlement, offered its support in a July 31 letter to FERC, stating that removing the dam will restore natural river processes, spawning areas and cold water pools for fish, and significantly improve Klamath River's water quality.
Several individuals and some groups--including Siskiyou County and the Siskiyou County Water Users Association--have asked FERC to deny the transfer and license surrender.
With the new filing, KRRC secured extensions for funding agreements with the Oregon and California PUCs through 2024, and with California for its bond through June 2025.
KRRC noted that the settlement agreement anticipated removing the dams in 2020, which was based on receiving an earlier review and approval.
Klamath River Renewal now anticipates drawdown and removal will begin in 2022, "pending action by FERC and other regulators," its news release said, adding that this would require starting facilities removal and predrawdown actions no later than May 2021.
The filing also came with a stamp of approval from the Board of Consultants, which pointed to numerous changes since KRRC's Definite Plan that make it more financially sound.
These include its progressive design-build agreement with Kiewit Infrastructure West, which was selected as the general contractor; and entering into negotiations with Resource Environmental Solutions to assume the role as liability transfer corporation, according to the BOC's letter.
The consultants met with KRRC six times and "focused on reviewing and assessing the ability of Renewal Corporation to secure adequate funding for the removal of the dams, identify and manage risks, obtain appropriate levels of insurance, and meet the indemnification requirements."
The new filing also includes a Plan B--as requested by the consultants--for what KRRC will do if the $450 million in committed funds is not enough. In its filing, KRRC says that it "almost certainly has all funds necessary" to complete the project, but if funds do fall short, it would turn to mechanisms established in the KHSA. Under the settlement, parties have agreed to "work jointly to identify potential partnerships to supplement funds generated pursuant to this settlement."
KRRC says that assurances also come from its decisions to select a "best-in-industry team" to remove the dams. That includes AECOM as technical representative, which has participated as a lead designer or advisor in every dam removal effort on the West Coast, along with Kiewit Infrastructure West as general contractor; Resource Environmental Solutions as mitigation surety and specialty corporate indemnitor; and Aon Risk Insurance Services West to ensure insurance and bond programs are in place.
Kiewit will undertake final design specs, development of a guaranteed maximum price, site preparation, deconstruction, and mitigation and restoration. The company plans to finish 60 percent of the design by Jan. 31, 2020, and develop a GMP by February 2020. Once those are done, KRRC will update portions of the cost estimates.
"The GMP will provide definitive market proof of the sufficiency of the overall project budget. It will be subject to adjustments only if final permit terms are materially more costly than draft permit terms, or costs otherwise increase due to circumstances outside of Kiewit's control," the filing states.
If FERC approves the license transfer, PacifiCorp will continue to operate and maintain the four hydroelectric dams at its cost until the dam removal begins. Before that can happen, KRRC also needs a water quality certification and FERC's approval to surrender the license.