Enloe Dam remains an Economic Loser

News Release – November 18, 2014

Similkameen Falls2Study confirms that project will lose money on every megawatt hour produced –

project represents an ANNUAL rate increase of approximately $50 for each ratepayer.

Today, Conservation Groups release an updated review of the economics of restoring hydropower at Enloe Dam on the Similkameen River. The original economic review was completed in 2011, and the most recent review addresses how mandated and potentially increased minimum flows through the bypass reach would further impact the Public Utility District No. 1 of Okanogan County’s (OPUD) 2008 projections. This 2014 analysis, prepared by Rocky Mountain Econometrics of Boise, Idaho, concludes:

  • Construction costs continue to increase. RME estimates that inflation will drive Enloe’s cost to about $40 million and above in subsequent years.
  • Enloe dam will, depending on the amount of water dedicated to minimum instream flows over the falls, lose between $1.1 million and $1.5 million for each year the project operates. A loss of $25 to $41 on every MWh of electricity it produces.
  • OPUD will see operating income of only $2.1 million each year. With operating costs totaling $3,193,696 it will cost OPUD $1.1 million more each year to operate the Enloe Project than it would cost to purchase the power on the open market.

The report also addressed OPUD statements regarding potential premium pricing for power generated at Enloe Dam, Enloe’s ability to back up wind and solar energy, and that OPUD can run the project at a long term loss (40+ years) and then see a profit once construction debt has been retired. The report found:

  • Enloe does not qualify as green power. In the unlikely event that regulations are amended that would include Enloe, the premium would not be enough to cover Enloe’s losses.
  • As a run-of-river project, Enloe’s generation cannot effectively back up intermittent wind and solar projects.At the end of year 40, when the original loan for the project is paid off, accumulated losses plus interest will have grown to nearly $170 million, more than four times the original construction cost.
  • At that time, Enloe will be losing about $10 million per year and the net present value will never generate a profit.

“To avoid this monumental loss, OPUD has no choice but to pass the costs along to the ratepayers,” said Jere Gillespie of the Columbia River Bioregional Education Project. “If Enloe proceeds, it would increase electrical costs by $50 for each ratepayer, each year, in perpetuity.”

On July 9, 2013, OPUD received its Order approving a new license from the Federal Energy Regulatory Commission. Today, notwithstanding evidence of project monetary losses, greatly increased debt, and other uncertainties, OPUD continues to pursue repowering the project.

The Enloe Dam project has long been controversial for both environmental and economic reasons. Of particular concern is the current proposal to bypass virtually all of the river flow into the new turbines, de-watering Similkameen Falls for most of the year. Conservation Groups would prefer to remove the dam abandoned in 1958 and to restore more than 200 miles of free-flowing river on the Similkameen and its upstream tributaries.

“There is great uncertainly associated with the Enloe Project, including how much water must remain in the river to protect Similkameen Falls,” says Rachael Osborn with the Center for Environmental Law & Policy. “As the RME report shows, this could make the bad economic picture even worse, something the Okanogan PUD has failed to consider.”

“OPUD has repeatedly said, given the money already sunk in the project, that repowering is the only way to provide a return to its ratepayers,” said Thomas O’Keefe with American Whitewater. “At some point, they need to stop digging the hole deeper. And with this level of loss, that time is today.”

The conservation groups are Hydropower Reform Coalition, Center for Environmental Law & Policy, American Whitewater, North Cascades Conservation Council, and Columbia River Bioregional Education Project

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