Item B - EWEB Carmen-Smith Relicensing Project

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Carmen-Smith Relicensing Project Meeting Date: May 29, 2012 Agenda Item Number: B Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 541-682-5589 ISSUE STATEMENT This is a work session to provide the council information about Eugene Water & Electric Board’s (EWEB) project for relicensing the Carmen-Smith Hydroelectric Project. The work session will give some background for the item on the May 29 consent calendar for bonds to finance the project. BACKGROUND The Eugene Water & Electric Board owns and operates five hydroelectric generating facilities, three of which are located on the McKenzie River. All of EWEB’s hydroelectric facilities operate under federal operating licenses issued by the Federal Energy Regulatory Commission, or FERC. The Carmen-Smith Hydroelectric Project, which is located 71 miles east of Eugene on the upper McKenzie River, is EWEB’s largest hydroelectric facility and represents almost half of EWEB’s total utility-owned generation capacity. EWEB received an initial federal license for the Carmen-Smith Project in 1958, and the project went online in 1963. The original 50-year license expired in November 2008, and EWEB has been operating under an annual license from the FERC since that time. EWEB expects to receive a new 50-year operating license from the FERC for the Carmen-Smith Project in late 2012 or early 2013. Relicensing Process EWEB has been engaged in a process to relicense the Carmen-Smith Project since 2002. This relicensing process, which is dictated by federal regulation, resulted in the development of draft and final license applications that were submitted to the FERC in 2006. Beginning in early 2007, EWEB entered into settlement negotiations with a stakeholder group that included federal and state agencies, three Native American tribes, and a number of non-governmental organizations. The negotiations concluded in October 2008, with an agreement signed by EWEB and 16 other groups (EWEB Board Resolution #0833, October 21, 2008). The Settlement Agreement was filed with the FERC on October 23, 2008, in support of and as a supplement to EWEB’s 2006 license application. In May 2011, EWEB verified that the FERC has in its possession all of the requisite pieces to process the new license for the Carmen-Smith Project. In March 2012, EWEB received a notice that FERC staff had identified an issue regarding the license application that requires resolution before the license can be issued. Measures to address the issue, which involves the intersection of EWEB’s Carmen-Smith Project boundary, as licensed by the FERC, and the McKenzie Wild and Scenic River (WSR), as designated by Congress and managed by the USDA Forest Service, are underway and expected to be S:\CMO\2012 Council Agendas\M120529\S120529B.doc