Newberry Geothermal Pilot Project; Record of Decision

DEPARTMENT OF ENERGY

Bonneville Power Administration

Newberry Geothermal Pilot Project; Record of Decision

AGENCY: Bonneville Power Administration (BPA), DOE.

ACTION: Notice of Record of Decision.

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SUMMARY: The Bonneville Power Administration has issued a Record of

Decision (ROD) to purchase electrical power from the proposed Newberry

Geothermal Pilot Project (Newberry Project), to provide billing

credits\1\ to Eugene Water & Electric Board (EWEB), and to provide

wheeling services to EWEB for the transmission of this power to their

system. BPA has decided to acquire 20 average megawatts (aMW) of

electrical power from a privately-owned geothermal power plant on the

west flank of Newberry Volcano in Deschutes County, Oregon. The

Newberry Project will generate 30 aMW and will be developed, owned, and

operated by CE Newberry, Inc. of Portland, Oregon. In addition, BPA has

decided to grant billing credits to EWEB for 10 aMW of electrical power

and to provide wheeling services to EWEB for the transmission of this

power to their system. BPA expects the Newberry Project to be in

commercial operation by November 1997.

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\1\One method that BPA uses to acquire energy resources is

Billing Credits. With this innovative mechanism, authorized by the

Northwest Power Act, BPA provides a credit to an eligible customer

for load reduction actions and energy resource developments. A

complete description of the Billing Credits Policy is presented in

an Environmental Assessment (DOE/EA-0180, June 1982), which has been

made available to the public.

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BPA has statutory responsibilities to supply electrical power to

its utility, industrial and other customers in the Pacific Northwest.

The Newberry Project will be used to meet the electrical power supply

obligations of these customers. The Newberry Project will also

demonstrate the availability of geothermal power to meet power supply

needs in the Pacific Northwest and is expected to be the first

commercial geothermal plant in the region

ADDRESSES: Copies of the Newberry Project FEIS, Executive Summary,

Appendices, and Comment Report, (DOE EIS-0207, June 1994), and the

USFS/BLM ROD are available from the Fort Rock Ranger District, 1230 NE

Third Street, Suite A262, Bend, Oregon 97701; telephone (503) 383-4703.

Copies of this ROD, the MAP, and the Resource Programs EIS are

available from BPA's Public Involvement Office, PO Box 12999, Portland,

Oregon 97212 or by calling BPA's nationwide toll-free document request

line, 1-800-622-4520.

FOR FURTHER INFORMATION CONTACT: Ms. Katherine S. Pierce, NEPA

Compliance Officer for the Office of Energy Resources--RAE, Bonneville

Power Administration, PO Box 3621, Portland, Oregon 97208, telephone

(503) 230-3962.

Public availability: This ROD will be distributed to all persons

and agencies known to be interested in or affected by the proposed

action or alternative.

SUPPLEMENTARY INFORMATION:

Purpose and Background

The Bonneville Power Administration (BPA) is a self-financing

Federal power marketing agency with statutory responsibility to supply

electricity to utility, industrial, and other customers in the Pacific

Northwest. The Pacific Northwest Electric Power Planning and

Conservation Act (Northwest Power Act) requires BPA to meet its

customers' electric power requirements. 16 U.S.C. 839d(a)(2). As part

of its mission, BPA is responsible for acquiring conservation and

additional generation resources sufficient to meet the future needs of

its utility customers. Section 6(d) of the Northwest Power Act

authorizes BPA to acquire experimental, developmental, demonstration,

or pilot projects of a type with potential for providing cost-

effective service to the region. 16 U.S.C. 839d(d).

The Pacific Northwest Electric Power and Conservation Planning

Council (Council), in its 1986 Power Plan, noted that ``* * *

approximately 4,400 megawatts of cost-effective electrical energy could

be obtained through the development of regional geothermal resource

areas.'' However, because the resource had not been confirmed, it was

not included in the portfolio of the 1986 Plan. The Power Plan called

for methods of confirming this resource so that it would be available

when needed. Newberry Volcano, Oregon, was identified as one of the

most promising sites.

The Newberry Project was selected under the BPA Geothermal Pilot

Project Program. The goal of the Program is to initiate development of

the Pacific Northwest's large, but essentially untapped, geothermal

resources, and to confirm the availability of this resource to meet the

energy needs of the region. The primary underlying objective of this

Program is to assure the supply of alternative sources of electrical

power to help meet growing regional power demands and needs.

BPA's purposes for this action are to:

(1) Meet contractual obligations to supply requested, cost-

effective power to BPA customers, having considered potential

environmental impacts and mitigation measures in its decision;

(2) Assure consistency with BPA's statutory responsibilities,

including the Pacific Northwest Electric Power Planning and

Conservation Act (Northwest Power Act), while taking into consideration

the Pacific Northwest Electric Power and Conservation Planning

Council's (Council) Conservation and Electric Power Plan (Power Plan)

and Fish and Wildlife Program; and

(3) Test the availability of geothermal energy to provide a

reliable, economical, and environmentally acceptable alternative energy

source to help meet the region's power needs.

To make these decisions, BPA cooperated on and adopted the Newberry

Geothermal Pilot Project Final Environmental Impact Statement (FEIS)

(DOE/EIS--0207, June 1994). The FEIS was tiered to the Resource

Programs Environmental Impact Statement (RPEIS-DOE/EIS-0162), which

considered the environmental tradeoffs among the resource types

available to meet BPA's needs.

The FEIS evaluated the exploration, development, utilization, and

decommissioning phases of the Newberry Project as well as related

transmission, wheeling, and billing credit components. Alternative A is

the CEC/EWEB proposal, and Alternative B is the three Federal agencies'

modification of the proposal. In addition to identifying and analyzing

the environmental impacts of these two alternatives for the Newberry

Project, the FEIS also evaluated the No Action alternative. By

contract, the Newberry Project is required to meet all Federal, state,

and local requirements. The FEIS fulfills the requirements of the

National Environmental Policy Act (NEPA) and meets the needs of the

U.S. Forest Service (USFS) and the Bureau of Land Management (BLM), who

have documented their decisions in a separate, joint ROD. BPA has also

determined that this action is consistent with the Council's 1991 Power

Plan.

Based on the information analyzed and disclosed in the FEIS and

associated documents, including the USFS/BLM ROD, BPA has determined

that the preferred alternative is Alternative B with the conditions and

mitigation and monitoring elements described in the USFS/BLM ROD. A

Mitigation Action Plan (MAP) developed from the FEIS analysis is

available. It requires implementation of the specific mitigation

requirements described in the FEIS and USFS/BLM ROD.

BPA develops and publishes a biennial integrated least cost plan,

the Resource Program. In its Draft 1990 Resource Program, BPA said it

would be willing to participate in up to three geothermal pilot

projects. The purpose of these projects would be to initiate

development, confirm resources, and determine the ability to develop

three of the largest, most promising sites in the region. BPA agreed to

purchase--in joint ventures with regional utilities--up to 10 average

megawatts (aMW) from each of three projects. After receiving comments

from customers supporting the projects, and after the Council approved

this approach in its 1991 Power Plan, BPA published a solicitation that

resulted in seven proposals.

The objectives of BPA's solicitation were to:

(1) Meet contractual obligations to supply requested, cost-

effective power to BPA customers, having considered potential

environmental impacts and mitigation measures in its decision;

(2) Assure consistency with BPA's statutory responsibilities,

including the Northwest Power Act, while taking into consideration the

Council's Power Plan and Fish and Wildlife Program; and

(3) Test the availability of geothermal energy to provide a

reliable, economical, and environmentally acceptable alternative energy

source to help meet the region's power needs. Three projects were

selected for contract negotiations on December 17, 1991. One of the

selected projects was a proposal by the California Energy Company (CEC)

and the Eugene Water & Electric Board (EWEB) to develop a 30-aMW

geothermal power plant and supporting facilities at Newberry Volcano,

Oregon.

This Administrative Record of Decision sets out the reasons for

BPA's decision to execute a Power Purchase Agreement with CE Newberry,

Inc. (a subsidiary of CEC), through which BPA will purchase electrical

output from the proposed Newberry Project; to execute a Billing Credits

Generation Agreement with EWEB for a portion of the output from the

Newberry Project; and to provide wheeling services to EWEB for the

transmission of this electricity to their system.

Legal Authority

BPA is a self-financing power marketing agency with the United

States Department of Energy. BPA was established by the Bonneville

Project Act of 1937, 16 U.S.C. 832 et seq., to market wholesale power

from the Bonneville Dam and to construct power lines for the

transmission of this power to load centers in the Northwest. As other

Federal dams and transmission lines were built, the combined power and

transmission facilities have been integrated into a single power supply

system. Today, BPA markets power from 30 Federal hydroelectric projects

and two nuclear plants. BPA's transmission systems contain 14,797

circuit miles and provide about half of the region's power and three-

fourths of its transmission capacity.

BPA sells wholesale electric power to 126 utilities, 13 direct

service industrial customers (DSIs), and several government agencies.

BPA's primary marketing area is the Pacific Northwest region, comprised

of the states of Washington, Oregon, Idaho, that portion of Montana

lying west of the continental divide, and small portions of California,

Utah, Wyoming, and Nevada. 16 U.S.C. 837 and 839a(14). BPA also has

congressional authorization to sell or exchange wholesale power outside

the Pacific Northwest to the extent that such power is surplus to the

needs of the region. See 16 U.S.C. 837a.

The Northwest Power Act directs BPA to serve the net power

requirements of any Pacific Northwest electric utility requesting

service, and to serve existing DSIs in the Pacific Northwest. 16 U.S.C.

839c(b)(1) and (d). Although BPA cannot own or construct electric

generating facilities, the Northwest Power Act permits BPA to acquire

rights to the output or capability of electric power resources. See 16

U.S.C. 839a(1) and 16 U.S.C. 839d. BPA may acquire a major resource (a

resource having a planned capability greater than 50 aMW and acquired

for more than 5 years, 16 U.S.C. 839a(12)) if it is consistent with the

Council's Power Plan. 16 U.S.C. 839d(c)(1)(D). If the resource is not

major, the Northwest Power Act instructs that the resource must be

consistent with the priorities required of the Plan. 16 U.S.C.

839d(b)(1) and (2).

The Northwest Power Act authorizes BPA to acquire experimental,

developmental, demonstration, or pilot projects of a type with

potential for providing cost-effective service to the region. 16 U.S.C.

839d(d).

BPA is also directed by the Northwest Power Act to grant billing

credits to a customer, if requested. 16 U.S.C. 839d(h). A billing

credit agreement is a contract between BPA and a customer, under which

BPA gives the customer a credit on its power bill for the difference

between BPA's wholesale power rate and the cost of power from a new

resource. The energy and capacity on which the credit is based is the

net amount the resource reduces the customer's load on BPA.

Finally, BPA must satisfy all requirements of the National

Environmental Policy Act (NEPA). 42 U.S.C. 4321 et seq.

Description of Need

BPA load forecasts for the 1990 Resource Program showed that if the

medium load growth rate occurs, BPA must acquire 500 aMW by the year

2000 to meet customers' needs. Pacific Northwest Loads and Resources

Study, 1990. If utility and DSI loads grow at the medium-high rate, BPA

will need to acquire an additional 1,500 aMW by the year 2000. The

analysis in BPA's Resource Programs Environmental Impact Statement

(RPEIS) showed that geothermal is a reliable source of electric power

that can help meet energy needs in the Pacific Northwest. Final

Environmental Impact Statement: Resource Programs, 1993.

1990 Resource Program

BPA's 1990 Resource Program, issued July 1990, defined the actions

BPA would take to develop new resources to meet the power requirements

of its customers. The 1990 Resource Program focused on Fiscal Years

1992 and 1993, and included near-term actions to prepare for these

years. One of these actions was an offer to participate in geothermal

pilot projects aimed at confirming resources and determining

developability at three of the largest, most promising sites in the

Pacific Northwest.

The 1990 Resource Program was developed through an extensive public

process that included a technical review panel. Many of the comments

received supported BPA's participation in geothermal pilot projects.

Council Plan

The Council's 1991 Power Plan noted that the geothermal

confirmation program in BPA's 1990 Resource Program was consistent with

the recommendations of the Council's Research, Development, and

Demonstration Advisory Committee. The Council's ``Recommended

Activities for Implementing the 1991 Power Plan'' included geothermal

demonstration projects initiated by BPA and the region's utilities. The

Council acknowledged that energy costs of a demonstration plant would

likely be higher than the marginal cost of other new resources, but the

premium would decline over time.

Pilot Project Solicitation

Request for Proposals

BPA published a Request for Proposals (RFP) in Commerce Business

Daily on July 5, 1991. The RFP stated that BPA would be willing to

purchase up to 10 aMW of electric power from each of three projects

located in or near the BPA service area. Other conditions specified in

the RFP were:

BPA would not finance projects but only purchase output

Part of the output from each project had to be purchased

by another utility

Overall project size could be greater than 10 aMW

The proposed site had to be capable of supporting at least

100 MW

The proposed site had to be suitable for operation as a

Federal geothermal unit

The resource area had to be undeveloped for electric power

production

The power contract had to include an option for BPA to

purchase subsequent output from the site

Projects that would allow BPA to be a cooperating agency

in a BLM environmental process were strongly preferred

These conditions were intended in part to limit the number of

proposals likely to be submitted. BPA could devote only a small amount

of staff time to evaluating proposals, and therefore tried to be quite

specific about what it wanted.

Project sponsors were encouraged to submit project outlines or

summaries ahead of time before developing detailed proposals. This was

intended to prevent developers from spending money developing proposals

that would not meet program goals. Several developers met with program

staff or discussed the RFP on an informal basis before submitting

proposals. Letters of intent were due September 3, 1991, and proposals

were due October 1, 1991.

Further information on BPA's Geothermal Pilot Project Program was

published prior to the solicitation in an article in a geothermal

industry trade journal, the Geothermal Resources Council BULLETIN

(December 1990). The article specified that the projects had to be in

three different resource areas, preferably involving different resource

developers. This article was provided to developers and others who

inquired about the RFP or the Geothermal Pilot Project Program.

Proposals Received

Seven proposals were received. Two of them clearly did not meet

program objectives, and a third was withdrawn by the sponsor during the

evaluation period.

One of the projects not meeting program objectives was located in

Canada. Although projects located outside the United States were not

excluded in the RFP, a foreign project would not have met the program

goal of testing ability to overcome (U.S.) institutional barriers to

development. Furthermore, a Canadian project would not be subject to a

Bureau of Land Management (BLM) environmental process.

A project was proposed at Raft River, Idaho, employing a power

cycle (the ``Kalina'' cycle) considered to be precommercial. Testing

new power plant technologies was not a goal of the program, and

previously developed sites were specifically excluded by the RFP. In

the early 1980s, Raft River was the site of a demonstration plant

developed by the U.S. Department of Energy. Sponsors of the Canadian

and Raft River projects were notified on October 30, 1991, that their

proposals had been eliminated from consideration.

Four proposals received detailed evaluation. They were:

A proposal by the California Energy Company (CEC) and the

Eugene Water & Electric Board (EWEB) for a 30-MW project at Newberry

Volcano, Oregon.

A proposal by Vulcan Power Company (Vulcan) for a 30-MW

project at Newberry Volcano, Oregon.

A proposal by Trans-Pacific Geothermal Corporation for a

30-MW project at Vale, Oregon.

A proposal by Unocal Corporation for a 14-MW project at

Glass Mountain, California.

Evaluation Process

Proposals were evaluated by a project team composed of BPA staff.

Two sets of criteria were used. The first set, considered ``threshold''

criteria, were the criteria stated in the RFP. Proposals were

eliminated from further consideration if they failed to meet any of

these criteria except the utility cost sharing requirement. Threshold

criteria included:

Resource area considered capable of producing at least 100

MW. Since BPA required the sites to be undeveloped, there was no way to

know reservoir size with much certainty for the proposed sites. If

better data were not available, a resource estimate by the U.S.

Geological Survey or some other authoritative source was considered

sufficient basis for meeting this criterion.

Suitable for operation as a unit. For the purpose of

conserving the resource, Federal geothermal leasing regulations allow

geothermal leaseholders to unite with each other in the development or

operation of any geothermal resource area. The leases affected by such

a cooperative arrangement are called a unit, and one of the

leaseholders is designated the unit operator. 43 CFR 3243. BPA wanted

to encourage coordinated development and avoid resource depletion

problems experienced elsewhere, and therefore included suitability for

unitization as a selection criteria. The lease block had to be unitized

or suitable for unit operation with the developer as operator. If the

area was not already unitized, the developer had to control a large and

reasonably contiguous lease block. Bureau of Land Management staff were

consulted regarding the suitability of proposed sites for unitization.

It should be noted that unitization in itself was not the objective of

this requirement. The objective was to encourage coordinated

development and conservation of the resource.

Resource area not previously developed for electric power

production. A program goal was to develop new resources. If a power

project had already been developed at a site, the site did not meet

this criterion.

Output contract proposed. BPA was willing to purchase

output only, not finance projects.

Amenable to BPA receiving an option on future power from

the lease block. Since the cost of power from the first project was

expected to exceed the cost of other resources available to BPA, BPA

required a right of first refusal on up to 100 MW of additional

development at each site. Subsequent plants would benefit from

established infrastructure and lower risks, and the cost of power from

them would likely be more cost-effective.

Cost sharing by another utility. Initiating development of

Northwest resources would have regionwide benefit. A cooperative effort

that included cost sharing seemed appropriate. It was recognized that

developers might have difficulty enlisting another utility before BPA

identified candidate projects, so failure to meet this criterion did

not disqualify a proposal during the evaluation period. Developers were

notified of this.

Project allows BPA to be a cooperating agency in a BLM

environmental process. Staffing constraints would not allow BPA to be

the lead agency in the NEPA review. This criterion effectively limited

projects to Federal or Tribal land.

The second set of criteria addressed the developers ability to

complete the project successfully. These are standard criteria used by

BPA in previous and subsequent solicitations, and included:

Development team experience. How qualified was the project

team? Had they worked together on previous successful projects? A

salaried staff currently involved in project development or in

operating projects tended to be rated more highly than a listing of

consultants that would be hired for a proposed project. A salaried

staff was thought to indicate greater stability and commitment by the

developer to maintaining a long term presence in the geothermal

industry. There was also no guarantee that the listed consultants would

ever work on a proposed project.

Ability to finance the project. Proven ability to finance

projects was desired. Was the developer experienced in obtaining

construction and long term project financing? Was the financing plan

realistic? Audited financial reports were requested from each

developer, and Dun and Bradstreet financial information reports were

obtained, if available.

Project design. Had all important aspects of project

design been considered?

Transmission availability. Were transmission capacity or

wheeling services available to deliver the energy to the BPA grid?

Site control. Developers were asked to provide copies of

lease documents or other evidence of site control.

Development schedule. Was the development schedule

realistic, well thought out, and logical? Did it include all important

activities?

Environmental impacts/siting issues/permits and licenses.

To what extent had environmental and siting issues been identified?

What progress had been made in obtaining permits and licenses? BPA

staff consulted with land management agencies in the project areas, and

requested additional information from developers, when necessary.

Cost of energy. This was used more as a starting point for

negotiations than as a selection criterion. BPA did not expect

developers to commit to a price until the terms and conditions of the

power contract were better known. Another reason for not selecting

based on price was to avoid being forced to select weak projects with

unrealistic power prices and to discourage ``low-ball'' bids.

The evaluation process included a preliminary evaluation of the

proposals, followed by requests from the BPA project team for

additional information and a final evaluation.

An issue of site control affecting the two proposed projects at

Newberry Volcano was examined. The ownership or ownership share of

three leases--OR 11987, OR 11992, and OR 45506--was a matter of dispute

between CEC and Vulcan. Since both developers considered it likely that

litigation would be necessary to resolve this dispute, and because

BPA's decision to purchase only output was thought to place all risk of

nonperformance on the developer, this was not a critical factor in the

selection process.

The BPA team selected three projects for further consideration, and

the Administrator was briefed and a final decision made on December 17,

1991. The proposers were notified of BPA's decision by registered

letter between December 18 and December 20, 1991.

The December 18 letter to Vulcan Power Company, which was not

selected, explained the reasons for BPA's decision. The CEC/EWEB

project was stronger in many respects and met BPA requirements for

utility cost sharing. Also, Vulcan lacked a history of successful

project development (the one project it attempted was unsuccessful). As

noted in the December 1990 Geothermal Resources Council BULLETIN

article mentioned above, only one project would be chosen at each site.

Contract Negotiations

The three projects selected for contract discussions were Glass

Mountain, Vale, and the CEC/EWEB Newberry Project. All three projects

were considered capable of meeting the goals of the program. Total

output from the three projects exceeded the 30 aMW BPA agreed to

purchase in the solicitation. But because the terms of the power

purchase contracts and the degree of participation by other utilities

were not known at this time (only one of the projects had identified a

utility partner), and in the interest of meeting program goals, BPA

agreed to consider purchasing more than 30 aMW. The Glass Mountain and

Vale Projects will, if appropriate, be the subject of separate Records

of Decision, and will not be discussed further in this document.

Negotiations for the Newberry Project began in January 1992, and

were completed in December 1992. The negotiations resulted in three

proposed agreements:

A Power Purchase Agreement between CEC and BPA;

A Billing Credits Generation Agreement between EWEB and

BPA;

A Power Purchase Agreement between CEC and EWEB.

Under its Power Purchase Agreement with CEC, BPA would purchase

approximately 20 average megawatts of output from the project and

receive an option on an additional 67 megawatts, if available in the

future. Under its Power Purchase Agreement with CEC, EWEB would

purchase 10 average megawatts from the project and receive an option on

33 megawatts, if available. BPA would give EWEB billing credits for 10

average megawatts under a Billing Credits Generation Agreement. The

term of the agreements is 50 years from the commercial operation date

of the project.

The price of energy will not exceed BPA's Alternative Cost, as

established in BPA's 1990 Billing Credit Solicitation. The Alternative

Cost is the estimated cost which BPA would incur as a result of

acquiring new resources, and is the upper limit on the amount of a

billing credit other than conservation.

Memorandum of Understanding

A Memorandum of Understanding (MOU) between CE Newberry, Inc. (a

subsidiary of the California Energy Company), EWEB, and BPA was

executed on December 17, 1992. The MOU acknowledged that the parties

had reached agreement on contract principles, and defined the roles of

the parties during the environmental review required by NEPA. The MOU

noted that BPA had not made a final decision to sign any power purchase

or other agreements, and that such power purchase obligation would not

arise, if at all, until the environmental impacts of the proposed

Newberry Project had been analyzed in accordance with NEPA.

Environmental Considerations

National Environmental Policy Act Background

The National Environmental Policy Act (NEPA) is the basic national

charter for protection of the environment. It establishes policy, sets

goals, and provides means for carrying out its policy. NEPA requires

Federal agencies to make environmental information available to public

officials and citizens before decisions are made and before actions are

taken. Accurate scientific analysis, expert agency comments, and public

scrutiny are essential to implementing NEPA. The NEPA process is

intended to help public officials make decisions that are based on an

understanding of environmental consequences. NEPA mandates that Federal

agencies use all practical means to protect, restore, and enhance the

quality of the human environment and avoid or minimize any possible

adverse effects of their actions upon the quality of the human

environment.

Newberry Geothermal Pilot Project Environmental Impact Statement

On December 2, 1992, a Notice of Intent to Prepare an Environmental

Impact Statement (EIS) in accordance with NEPA was published by the

Environmental Protection Agency (EPA) in the Federal Register. This EIS

would analyze the environmental impacts of various alternatives related

to the development of the proposed Newberry Geothermal Pilot Project

(Newberry Project). The U.S. Forest Service (USFS) would be the Lead

Agency in this process; the Bureau of Land Management (BLM) and BPA

would be Cooperating Agencies.

BPA adopted the Newberry Geothermal Pilot Project Final

Environmental Impact Statement (FEIS) (DOE/EIS-0207, June 1994). The

FEIS was tiered to the Resource Programs Environmental Impact Statement

(RPEIS-DOE/EIS-0162), which considered the environmental tradeoffs

among the resource types available to meet BPA's need.

The FEIS evaluated the exploration, development, utilization, and

decommissioning phases of the Newberry Project as well as related

transmission, wheeling, and billing credit components. Alternative A is

the CEC/EWEB proposal, and Alternative B is the three Federal agencies'

modification of the proposal. In addition to identifying and analyzing

the environmental impacts of these two alternatives for the proposed

Newberry Project, the FEIS also evaluated the No Action alternative.

The Power Purchase and Billing Credits Agreements require that the

Newberry Project meet all Federal, state, and local requirements. The

FEIS fulfills the requirements of the National Environmental Policy Act

(NEPA) and meets the needs of the USFS and the BLM, who have documented

their decisions in a separate, joint Record of Decision (ROD). BPA has

also determined that this action is consistent with the Council's 1991

Power Plan.

The following alternatives were considered in the EIS:

Alternative A

Alternative A is the proposal as submitted by CE Exploration

(CEE, a subsidiary of the California Energy Company). It includes

exploration, development, production, utilization, and

decommissioning of the geothermal resources on CEE's Federal

geothermal leases on the west flank of Newberry Volcano. Highlights

of this alternative, which is described in more detail in the FEIS,

include development of exploration/production well pads at 14

specific locations; construction and operation of one 33-MW (gross

output) power plant at a specific site; construction of associated

pipelines and access roads; construction and utilization of an H-

frame, 115-kilovolt transmission line along the north side of Forest

Road 9735 to deliver power from the plant to an existing

transmission line; and mitigation and monitoring measures as

proposed by CEE. These would be permanent facilities with a contract

life of at least 50 years.

Alternative B

Alternative B is a modification of Alternative A developed by

the three Federal agencies that allows for greater siting

flexibility to minimize potential environmental impacts once the

geothermal resource is defined through exploration. It is similar to

Alternative A in plant design and size, size of the well field and

pads, and design of the facilities except for the transmission line.

It differs most in respect to the siting flexibility of well pads,

power plant, pipelines, and access roads and the mitigation and

monitoring measures to be included. It is described in detail in the

FEIS and highlights include development of exploration/production

well pads at 14 out of 20 possible locations; siting the individual

well pads within a 40-acre or less siting area; construction and

operation of one 33-MW power plant at one of three possible

locations; construction of associated pipelines and access roads;

construction and utilization of a single pole design 115-kilovolt

transmission line to the south of Forest Road 9735; and additional

mitigation and monitoring measures proposed by the agencies and

public. These facilities would also be permanent, with a contract

life of at least 50 years.

Alternative C

Alternative C is the No Action alternative. Under this

alternative, BPA would not acquire the energy output from the

proposed Newberry Project, thereby foregoing the opportunity to

supplement BPA's energy supply and to demonstrate the availability

of geothermal power to help meet the region's power needs. BPA would

also not provide billing credits to EWEB, with the same results as

above, and would not provide wheeling services to transmit the

energy. CEE would not go forth with the project without the power

purchase agreement, and EWEB would cease further involvement without

billing credits. This alternative is environmentally preferable, as

it would result in no impacts to the immediate environment.

Other Actions

Because the proposed action will not satisfy BPA's total need for

electrical energy, implementing the proposed action will not foreclose

consideration of other potential BPA resource actions. Resource types

potentially available to meet future load growth were comparatively

evaluated in the RPEIS and include:

Conservation (commercial, residential, and industrial

sectors);

Renewables (hydropower, wind, biomass, solar, and other

geothermal power);

Cogeneration;

Combustion turbines;

Nuclear; and

Coal.

Decision Factors and Issues

All of the project alternatives were evaluated against the purpose

and need for the Newberry Project, and only Alternatives A and B would

satisfy the need for electrical power. These alternatives would also

help BPA meet its contractual obligations and are consistent with BPA's

statutory responsibilities. Based on the information analyzed and

disclosed in the FEIS and associated documents, including the USFS/BLM

ROD, BPA has determined that the preferred alternative is Alternative B

with the conditions and mitigation and monitoring elements described in

the USFS/BLM ROD. The rationale for selecting Alternative B is

summarized in the USFS/BLM ROD by major issues that were of most

concern or apparent controversy. A Mitigation Action Plan (MAP)

developed from the FEIS analysis is available. It requires

implementation of the specific mitigation requirements described in the

FEIS and USFS/BLM ROD.

Environmental Consultations, Review, and Permit Requirements

BPA reviewed the status of all permits and licenses required for

the Newberry Project, consulted with CEE to satisfy area-wide, state,

and local environmental plans and programs, and developed a Mitigation

Action Plan MAP to assure that all environmental requirements are

addressed and that all practicable means to avoid, minimize, or

mitigate environmental impacts have been adopted. It implements the

specific mitigation requirements described in the FEIS and USFS/BLM

ROD. Development of the Newberry Project will be consistent with

environmental policies established by NEPA and the Oregon Energy

Facility Siting Council (EFSC), and will be consistent with the

requirements of the Council's Power Plan.

Monitoring and Enforcement

The MAP (Attachment 2) for the Newberry Project requires

implementation of mitigation measures necessary to reduce the

environmental impacts identified in the FEIS. The USFS, BLM, and BPA

all have responsibility for monitoring the progress of the Newberry

Project and ensuring that these measures are taken as appropriate. The

USFS and BLM responsibilities are detailed in the USFS/BLM ROD.

(Attachment 1). BPA will continue to monitor the Newberry Project

through its environmental oversight program. The Power Purchase and

Billing Credits Agreements stipulate the penalties for noncompliance

with these measures.

Decision

Upon consideration of the entire record, BPA has decided to execute

a Power Purchase Agreement with CE Newberry, Inc., execute a Billing

Credits Generation Agreement with EWEB, and provide wheeling services

for transmission of energy from the Newberry Project to EWEB's system.

Issued in Portland, Oregon on September 16, 1994.

John. S. Robertson,

Deputy Administrator.

[FR Doc. 94-26537 Filed 10-25-94; 8:45 am]

BILLING CODE 6450-01-P