A Memorandum of Agreement (MOA) was announced on November 17, 2020 by Berkshire Hathaway-owned PacifiCorp, the States of California and Oregon, the Karuk and Yurok Tribes, and the Klamath River Renewal Corporation (KRRC) that describes how the parties will proceed with implementation of the Amended Klamath Hydroelectric Settlement Agreement (KHSA) and, ultimately, dam removal.
The Amended KHSA was signed by 23 parties in 2016 to set the terms for the removal of four hydroelectric dams on the Klamath River and related restoration activities. These parties included the Federal Government, the States of Oregon and California, Native American Tribes, local government, and various non-governmental entities. The KHSA called for ownership of the dams – and any liability associated with dam removal – to be transferred from PacifiCorp to KRRC prior to dam removal.
The Federal Energy Regulatory Commission (FERC) is charged with oversight of hydroelectric dams in the United States. Therefore, implementation of the KHSA required approval from FERC for the ownership transfer of the dams and separate FERC approval of the plan to decommission and remove the dams and related facilities.
In response to a KRRC and PacifiCorp filing, on July 16, 2020 FERC approved the partial transfer of the license to KRRC but required PacifiCorp to stay on as co-licensee. In its decision, FERC noted that “… it would not be in the public interest for the entire burden of these efforts to rest with the Renewal Corporation … Were the Renewal Corporation to be the sole licensee, it might ultimately be faced with matters that it is not equipped to handle.”
Importantly, FERC found in its Order that KRRC had the technical and legal capacity to perform dam removal and that KRRC funds were likely sufficient to complete the project. The Order concluded KRRC’s extensive due diligence that accounted for input from an independent Board of Consultants required by FERC adequately responded to the Commission’s information requests across many technical aspects of the project. However, the FERC Order required PacifiCorp to remain a co-licensee to serve as a financial backstop for any unexpected costs that might exceed the $450 million available for the project under the KHSA.
PacifiCorp viewed the terms set by FERC in its July 16, 2020 Order as inconsistent with the KHSA and immediately entered into discussions with other signatories to the KHSA. PacifiCorp had long viewed transfer of ownership prior to removal as important to protect its customers from any potential liability arising from dam removal and considered those protections a core benefit of the settlement agreement. In response, the states, tribes, and KRRC worked with PacifiCorp and PacifiCorp’s parent company Berkshire Hathaway Energy to create terms that would work for the utility while still allowing the river restoration project to move forward without unnecessary delay.
The November 2020 MOA among PacifiCorp, the States of Oregon and California, the Karuk and Yurok Tribes, and KRRC describes how the parties will implement the Amended KHSA and address FERC’s concern for additional protection against potential cost overruns, while respecting PacifiCorp’s commitment to transferring ownership before dam removal begins. The MOA calls for Oregon and California to serve as co-licensees with KRRC, allowing PacifiCorp to transfer ownership and responsibility for dam removal to the “dam removal entity” as called for in the KHSA.
With the MOA in place, the parties submitted an Amended License Surrender Application to FERC. The KRRC project is the largest dam removal and river restoration project in US History.
