419 



pumping from the mainstem. 22) 



3.0 The Discount Generates Hidden Hydropower Opportunity Costs 

 Which Require Estiaation and Inclusion in BPA's Calculation of the 

 Costs of the Discount in FY 1994 and FY 1995 



3.1 The discount contributes to irrigation inefficiencies in 

 Franklin County which cost BPA ratepayers nearly -3 million 

 annually in lost hydropower revenues. 



The Conservation District has determined that 4" acre inches 

 in excess of crop requirements are being applied to 221,000 acres 

 in that county. From the point of diversion at Grand Coulee, these 

 excesses entail a hydropower opportunity cost of $2,916,941 

 annually. 23) The irrigation discount had the effect of reducing 

 pumping rates by 21% in Franklin County's Agricultural Production 

 Area in 1987. 24) The district has identified low-priced pumping 

 power as a factor contributing to excessive water applications by 

 irrigators and their reluctance to engage in water conservation in 

 that area. 



An application of the modified Bernardo-Whittlesey model 

 employed in NEA's 1989 study of irrigator responses to energy price 

 increases would permit estimation of the amount of these hydropower 

 opportunity costs directly attributeible to the irrigation discount, 

 thus enabling BPA to incorporate those hidden costs in the agency's 

 fiscal planning for FY1994 and FY1995, in which the amount of the 

 discount is expected to increase by 50%. 



3.2 flhen coabined with deferred conservation investaents, the 

 hydropower opportunity costs of the irrigation discount projected 

 for FY 1994 & FY 1995 aay equal or exceed BPA's projected discount- 

 related revenue deficiencies. 



Estimates similar to those for Franklin County can be made for 

 that portion of the 4.9 million acres affected by the discount and 

 under sprinkler irrigation from the Columbia River system where, 

 based on Washington State's estimates, twice as much water is 

 withdrawn than required by current cropping patterns. Generalizing 

 Franklin County's estimates over various diversion points in the 

 system yields annual hydropower losses approaching $40,000,000 

 attributable to excessive application alone, independently of 

 losses in transmission. But such a generalization has no empirical 

 basis, and lacks specific connection to the discount's effects on 

 the potential for hydropower recapture in each production area. 

 Nevertheless, there is clear enough evidence that the losses may be 

 significant and require assessment by the agency. 



It is striking, given BPA's early understanding of the 

 depressing effects of pumping rate discounts on irrigator 

 efficiencies and conservation investments, and the availability of 



