Major functions of the Northwest Power Pool are: to 

 coordinate power generation to insure that each member can 

 meet its requirements; to schedule maintenance outages to 

 the extent possible so that the region's needs can be met at 

 all times; to control the whole system and ensure that proper 

 voltages and frequency are maintained; to coordinate communi- 

 cation among members; to represent the Northwest as a group 

 on the national level; and to collect data for future 

 planning on a regional basis. It is important to both the 

 region and the members of the pool that these functions be 

 carried out to insure an efficient and smooth operating 

 system. 



Headwater Payments 



A third component of the operational organization is 

 the provision for headwater payments. Downstream dams are 

 required to make payments to owners of upstream storage 

 facilities based on the benefits received from the release of 

 upstream storage. 



For each reservoir, a computation is made to determine 

 the cost of storage, which includes the capital costs of the 

 dam, operation and maintenance costs, taxes, interest, 

 depreciation, insurance, interim replacements, and joint use 

 costs. The cost of storage does not include any costs 

 associated with power production at site. The computed cost 

 may be bound by a predetermined cost limit adjusted each year 

 for every reservoir. The headwater payments are determined 

 by the smaller of the computed storage costs or the cost 

 limit. 



The portion of the costs payable by a downstream dam 

 depend on the portion of the benefits received. An assess- 

 ment is made to determine the total energy available from the 

 storage at the upstream reservoir. This calculation includes 

 the power generation produced at site and the generation 

 produced at all the downstream dams. Each downstream dam's 

 portion of the cost is the ratio of its benefits to the total 

 benefits multiplied by the storage cost (or the cost limit) . 



Benefits and Costs to Western Montana and the Northwest 

 Region 



"For more than a half century, electrical power has been 

 the cornerstone of the Pacific Northwest economy" (Northwest 

 Power Planning Council [NWPPC] 1986) . The extensive 

 hydropower system of the Columbia River Basin — the largest in 

 the nation — supplies about 70 percent of the electricity in 

 the Northwest. 



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