ANALYSIS: Fish and energy needs clash in the Midwest

Sunday, July 19, 2009 | 4:48 p.m. CDT

JEFFERSON CITY — Thousands of electric customers in several central U.S. states could be on the hook for the cost of improved trout fishing in northern Arkansas.

That's the assertion, at least, of a regional electric company and some utility regulators who are waging a behind-the-scenes battle with the federal government over the financial effect of a plan that would reduce the hydropower capacity of several dams.

Residents in Arkansas, Kansas, Louisiana, Missouri, Oklahoma and Texas all receive electricity from dams in the White River basin. The cold water that flows from those dams also provides a good habitat for trout.

But the needs of the fish can clash with the electricity demands of humans.

For decades, the U.S. Army Corps of Engineers has operated the dams that form Bull Shoals and Norfork lakes along the Arkansas-Missouri border as peak-power production facilities. Large quantities of water rush through turbines to create electricity when it's most needed, such as on hot summer days. At other times, virtually no water flows forth.

That creates an unstable environment for trout, a popular game fish that can flourish in a consistently cold stream but can founder when water slows, pools and warms.

The "White River Minimum Flows" project, initially authorized under a 1999 federal law, would release a continual flow of water from the dams to improve trout habitat. The assumption is that trout will live longer, grow bigger, become more abundant and lure more fishermen to northern Arkansas, boosting various tourist-dependent businesses, said P.J. Spaul, a spokesman for the Army Corps of Engineers office in Little Rock, Ark.

But one side effect would be a reduced capacity to produce electricity at the two federal dams and at an upstream hydroplant owned by The Empire District Electric Co., a Joplin, Mo.-based publicly traded utility.

Empire, which generates power from Lake Taneycomo near Branson, Mo., serves about 167,000 electric customers, mostly in southwest Missouri but also in southeast Kansas, northeast Oklahoma and northwest Arkansas. Electricity from the federal dams is marketed through the Southwestern Power Administration to customers of rural electric cooperatives and municipal utilities in those four states, plus Texas and Louisiana.

In January, the Southwestern Power Administration determined Empire would be due about $41 million in compensation for the energy it won't be able to produce because of the improved downstream trout habitat. But last month, the federal agency lowered that to about $22 million after changing its reimbursement formula.

Empire executives fear the newly proposed payment won't make up for its lost energy production.

"There's no Santa Claus here. If there are increased costs to help the trout fishermen in Arkansas, it's our customers who will have to end up paying for it" through higher electricity rates, said Brad Beecher, Empire's chief operating officer for electricity.

Empire submitted written comments earlier this month to the Southwestern Power Administration objecting to its revised compensation formula on a variety of grounds. Among its protests is that federal officials failed to account for a new Missouri law setting targets for renewable energy production for utilities or for a bill in Congress that seeks to curb carbon emissions from power plants while encouraging green energy.

By cutting Empire's hydropower capacity, the federal government is forcing it to rely more on other power plants that are potentially less carbon-friendly, thus more costly, under a new national energy policy.

The four-member Missouri Public Service Commission, which regulates Empire, cited similar concerns in written comments submitted to the federal agency. In a separate letter, commissioner Jeff Davis said he was "outraged" by the federal agency's revised reimbursement formula, claiming it undervalues Empire's hydropower and "cheats Missouri electric consumers out of millions of dollars more."

George Robbins, director of the Division of Resource and Rates for the Southwestern Power Administration, said its revised formula wasn't motivated by an attempt to reduce the federal government's payment.

"We certainly support the concept that these electric customers shouldn't have to support this recreational (trout) facility downstream," Robbins said. "What we're trying to do is make it rate neutral" for electric customers.

The new water flows from the dams in the White River basin are scheduled to begin in January 2011. Robbins said Empire's actual payment will be calculated with energy costs and interest rates in place at that time and may differ from the current $22 million estimate.

Robbins also said the federal agency would take into consideration the comments of Empire executives and Missouri utility regulators and make further changes to the formula, if deemed appropriate.

"We're just trying to make it as fair as possible," Robbins said.


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