Reclamation's Commitment to Federal Power

Remarks Delivered By:
John W. Keys, III, Commissioner

Mid-West Electric Consumers Association
Denver, Colorado

December 08, 2004

I am delighted to be here with you again this year. One of the things I'm most proud of at Reclamation is the strong partnerships we have built, and I love to get out here to talk with you, the folks who are getting things done on the ground.

When this Administration came in four years ago, we had two main goals: first, to concentrate on our core mission of delivering water and power, and doing what it takes to get that done; and second, to renew and reinvigorate our relationships with our partners in water and power groups. It's a privilege to have the chance to serve you again the next four years.

Even with a reelection, there are bound to be changes. Bennett Raley, our Assistant Secretary for Water and Science, has resigned. We'll miss his hard work and all he brought to his office.

The Acting Assistant Secretary is Tom Weimer. Tom is a good man to work for—he really understands water issues and supports the work we do. I'm looking forward to a lot of continued progress working with Tom.

We expect the transitions to the second term to be seamless. President Bush has said that he's anxious to push forward, and we at Reclamation are too.

The theme of this meeting—Fighting for Federal Power—is very striking. When you look back at the history of western water, there are tales of water wars, shovel fights on ditch banks. We want to prevent these stories from being replayed today and tomorrow in the growing competition for water.

Reclamation will continue to work with you to generate reliable, cost-effective hydropower. At the same time, we are working hard to head off fights over water and power by looking ahead and by emphasizing work in cooperation with our partners.

At Interior, we follow a principle Secretary Norton brought, called the 4Cs: Conservation through cooperation, communication, and consultation. Cooperation, communication, and consultation have never been more important to making sure that progress continues.

I want to update you on some of our progress and draw special attention to the Department's Water 2025 initiative. Water 2025 is aimed at preventing conflict and crisis over water and ensuring that the West continues to have reliable water supplies.

One change at Reclamation is that Great Plains Regional Director Maryanne Bach is leaving the RD post to become Reclamation's Director of Research. Maryanne did a great job of reinforcing relationships with our water and power customers.

I know that she will do excellent work heading our R&D program, working to develop and apply technology in meeting water and power challenges. We thank her for her excellent work and wish her well in her new job.

The search for a new RD is already underway. We have advertised the position, and filling it is a priority.

The water and power that Reclamation provides sustains a major part of the West's infrastructure. Our 58 powerplants have a generating capacity of 14,778,418 kW, making us the 10th largest producer of electricity in the West, and water from Reclamation projects is used to produce a large percentage of the West's agriculture.

Our customers depend on us for water and power, and the reliability of Reclamation powerplants is exemplary. Our forced outage rate is roughly one-half that of the industry as a whole, and in most cases we are able to meet our water delivery commitments even in low water years. Reclamation hydropower plays a critical role in the interconnected grid in our service areas. Last year's blackout in the East underscored the importance of the availability of a reliable electricity supplies.

In addition to providing electricity to wholesale consumers in the West, Reclamation hydropower also provides a significant portion of the system's ability to respond to fluctuations in voltage and load. This ability is brought about by adjusting the system voltage as it fluctuates (automatic voltage regulation—AVR) and matching the demand to the production of electricity (automatic generation control—AGC). The large rotating mass of hydroelectric generators also stabilizes the system and reduces the impact of fluctuations or detrimental events.

During times of electric system emergencies, Reclamation hydropower provides much of the system's ability to avoid outages by providing reserve power that can be brought on line instantaneously (spinning reserves), stand-by generation, equipment that keeps the power grid stable (power system stabilizers), AVR, and AGC which all help compensate for fluctuating power flows, generation drops, and transmission line failures that occur during an emergency. During the past 4 years, Reclamation has provided system support for emergencies many hundred times.

Our hydropower can be brought back on line quickly after an outage to provide needed electrical services to restore the grid and assist other regional utilities without relying on external power sources. We also provide a federally- mandated source of safe shutdown power for nuclear power plants in the West.

Two-thirds of Reclamation's power plants have the ability to be re-started without outside power (black start capability), and many of our power plants play a key role in the NERC and Western Electricity Coordinating Council (WECC) regional restoration plans to establish isolated areas of operating generation (generation islands) which can then be linked together to restore the interconnected grid.

One big challenge to our work is the drought that has touched most parts of the West over the past five years.

The drought has had a significant impact on our work. For example, water levels have been dramatically affected at Lake Mead, Lake Powell, and other reservoirs.

Research has helped to increase our understanding of the dynamics of drought. The research cannot, however, tell us whether we are at the conclusion of a drought cycle or in the midst of a longer cycle.

Some have compared the magnitude of the current drought in the Colorado River basin to that of the Dust Bowl. That comparison is arresting. Just as arresting is this: we are not in a crisis.

We can thank the foresight of past generations, who recognized that the West is largely desert and prepared accordingly by creating an effective system of dams and reservoirs. These facilities have served their purposes well over the past century and are keeping us out of crisis today. This does not, however, mean that we continue to do business as usual, because drought is not the only cause of water shortages.

The drought has captured our attention, but, even in normal or wet years, demands sometimes exceed available supplies.

The American West is changing—the population in the West is growing faster than anywhere else in the country.

On the power side of the house, with the uncertainty in the regulatory environment causing lack of investment in new power plants and transmission, the drought has made the situation equally serious.

Reclamation is working with our water, power and environmental stakeholders to meet these challenges.

I'm really excited about the Secretary's Water 2025 program as a way to meet challenges through cooperation and partnership.

As a way to address the growing competition for water, we launched the Secretarial initiative Water 2025: Preventing Crises and Conflict in the West. Water is our most precious resource in the West, truly our lifeblood: No water, no livelihood, no life. Water can also be our most contentious resource. Water 2025 has identified areas where potential crises and conflicts over water may occur.

Water 2025 has two purposes. First it provides a basis for a public discussion of the realities that face the West so that decisions can be made at the right level in advance of a water supply crisis. Second Water 2025 sets forth a framework to identify the problems, solutions, and a plan of action to focus the conversation as the Department of the Interior works with states, tribes, local and state governments, and the private sector to meet water supply challenges.

This year we launched the Challenge Grant program—which is the heart of our Water 2025 initiative. The Challenge Grant projects have proposed innovative ways to head off problems by conserving and distributing water more efficiently and more effectively through collaboration, water conservation, efficiency, and markets. The Challenge Grant program is a great example of the spirit of the Bush Administration's New Environmentalism. The Challenge Grant program supports, through cost-shares, partnerships that offer innovative, locally managed solutions to our most pressing water challenges.

The Challenge Grant program shows how leveraging the federal investment can provide tremendous benefits. Federal grants of $4 million are helping to fund the projects, which are returning almost $30 million in on-the-ground water delivery system improvements. That is a thirteen percent investment from the federal side. This program serves as an excellent model for how we should be using our federal investment for maximum impact.

The 19 projects that received fiscal year 2004 Water 2025 Challenge Grants represent 10 western states—from California to Colorado, from Montana to Texas.

Congressional action to date for fiscal year 2005 supports $19.5 million for Water 2025. We recently posted the Request for Proposals for fiscal year 2005, and we expect the program to thrive.

Reclamation, our Power Marketing Administrations, our customers, and our fellow federal generators work in an industry going through significant change, and we continue to respond to changes as they occur.

We maintain strong partnerships with our customers. You, our customers, continue to have a keen interest in containing costs, increasing efficiency, and maintaining reliability. We work closely with you as we develop our operation and maintenance workplans and our replacements program for hydropower equipment to ensure that your concerns are addressed.

This is a time of flat budgets, and I don't see that changing anytime soon. It is critical to Reclamation to have adequate funds for operation, maintenance and replacement of our power facilities. Mid West can be a strong partner in seeking receipt financing authorities for Reclamation, as well as the Corps of Engineers and Western, for those activities. The customer participation processes just revised in the Great Plains region are a solid foundation for that effort.

We also have a strong ongoing partnership with Western Area Power Administration. Great strides have been made, but there are many more opportunities to make partnering part of our day-to-day operations. These include:

  • Coordination of reliability council actions
  • Provision of system support during daily operations
  • Working with Western to ensure that federal water and power interests are protected during the formation of Regional Transmission Organizations
  • Coordination of legislation and policy strategy in response to the National Energy Task Force.

Reclamation has also initiated a number of activities aimed at ensuring the long-term viability of our power facilities. These include:

  • Ensuring the security of our generation and transmission infrastructure
  • Participating in the Interagency Forum on Infrastructure Protection
  • Carrying out a strong Power Review of Operations and Maintenance Program and following up on the recommendations from those reviews
  • Developing business based risk condition assessment for generation assets (We are working with the Corps on this)
  • Through succession planning and targeted hydropower training, ensuring that we have trained staff to operate our generation

Reclamation is committed to providing reliable, sustainable water and power supplies in the West for future generations.

Reclamation is committed to working in partnership with our Power Marketing Administrations, water and power customers, and other stakeholders in meeting this challenge.

I continue to be enormously proud of Reclamation's projects and people, and I'm excited and optimistic about our future.

I'll be happy to take any questions.

For More Information:

Reclamation's Power Program

Water 2025

Reclamation's Great Plains Region