408 



relatively low value, the Water Wise program makes no discernible 

 contribution to water conservation or hydropower recapture in the 

 Columbia Basin. 



In short. Water Wise primarily benefits irrigators who would make 

 the same efficiency investments without the subsidy; the program 

 lacks any mechanism to actually recapture water; and it places its 

 investments at points in the Columbia River Power System where the 

 hydropower potential of any recaptured water is relatively low. 



The Irrigation Discount 



Since 1985, BPA has extended a discount of 20% off wholesale rates 

 to irrigators in the customer area. In the current biennium the 

 discount, at 4.71 m/KWH, will cost the agency nearly $30,000,000 in 

 revenues and, based on studies commissioned by BPA in the late 

 1980s, induce an additional 3% in irrigation load*, thus adding to 

 BPA's costs and contradicting the ostensible energy conservation 

 purposes of its Water Wise program. 



In the records of decision since the discount's inception, the 

 agency has employed various justifications for its extension. 

 Initially justified as a distressed industry provision during the 

 agricultural slump of the mid-1980s, then adopted as a means of 

 increasing load and revenues during a temporary power surplus, the 

 agency currently supports continuation of the discount on the 

 grounds that the economic impact of its elimination would be 

 harmful to irrigated agriculture. But reports by BPA's own 

 economic analysts demonstrate the relative health of agriculture in 

 the Pacific Northwest generally: returns to agricultural capital 

 are generally 50% higher in the region than elsewhere in the U.S. 

 The only notable area of agricultural distress is among those 

 irrigators who now face the consequences of over-pumped ground 

 water supplies, a situation to which the irrigation discount, 

 ironically, has probably made its most calculable contribution by 

 lowering the cost threshold of ground water pumping. 



Distribution of the Discount's Benefits 



Investor-owned utilities receive roughly 40% of the discount, 

 passing it through to their irrigation customers. Public utilities 

 in the Sneike River and Mid- and Lower Columbia Basin distribute the 

 remaining 60%, chiefly to the same energy-intensive, high lift 

 pumpers who also receive energy conservation subidies under the 

 Water Wise program. A recent Institute analysis of one public 

 utility in the Lower Columbia — historically the leading public 



• The Role of Electricity in Pacific Northwest Irrigated 

 Agriculture, Volume 2: Background Materials and Support Documents 

 Sections D-G, DE-RP79-88BP39166, pg.E-6, February, 1989. 



