Chelan PUD approves Columbia River Treaty settlement, ending long dispute

WENATCHEE — Chelan County PUD commissioners unanimously approved a settlement Friday with the federal government over the utility’s share of Columbia River Treaty obligations, resolving a dispute that had been headed for trial in January.

The agreement sets the collective obligation of the Chelan, Douglas and Grant county PUDs at the financial equivalent of 25% of the treaty’s Canadian Entitlement through July 2044. Their previous agreement required them to provide 27.5% of the entitlement in power. The new settlement allows them to pay in money instead.

Chelan PUD’s share of the three utilities’ obligation is slightly more than 40%, General Counsel Erik Wahlquist told commissioners during the special meeting.

The settlement also requires the three PUDs to pay about $29.9 million for obligations accumulated through May while the dispute was unresolved. Chelan’s portion is slightly more than 40% of that amount. Additional payments will be calculated for June through September, Wahlquist said, so the final catch-up payment will be higher.

“This truly is history in the making,” commission President Kelly Allen said before the vote. She said the work and professionalism behind the agreement gave her pride in the district and in the collaboration among the three Mid-Columbia PUDs. “While we may have differences at times, when it matters, we know when to come together.”

The Canadian Entitlement compensates Canada for the downstream power benefits produced by water stored and released from Canadian reservoirs under the Columbia River Treaty. The three PUDs operate nonfederal dams that benefit from those flows, but their agreement with the United States governing their contribution expired in September 2024.

The PUDs had sued the federal government that June, seeking to establish what they would owe after the agreement expired and to examine how the benefits were calculated. They stopped making contributions when the agreement ended. The United States then filed counterclaims seeking continued payment.

Although a court dismissed the PUDs’ claims in February 2025, Wahlquist said the decision did not settle the underlying dispute. To prevail on its counterclaims, the federal government would still have had to establish the downstream power benefit and justify the share assigned to the PUDs. Defending against those claims would have allowed the utilities to pursue the calculations and methodology they had sought in their own case, he said.

The parties reached the proposed settlement after months of negotiations. Grant and Douglas PUD commissioners had already approved it, leaving Chelan as the last of the three boards to act. Friday’s vote authorized General Manager Kirk Hudson to take the steps needed to complete the agreement. Although Hudson attended the meeting via Zoom, Chief Operating Officer Dan Koch served as acting general manager so the settlement could be signed immediately.

Hudson told commissioners that one of its most important effects for customers is preserving local control over decisions about the output of the PUDs’ Mid-Columbia dams. The utilities had worked together to keep those decisions local, he said.

The settlement also calls for improved coordination and information sharing on river operations, along with work on emergency operating procedures.

Its July 2044 end date matches the term of the Agreement in Principle (AIP) reached by the United States and Canada to modernize the treaty. The international agreement has not been finalized, Wahlquist said. Under the PUD settlement, their obligations would fall if the final treaty terms reduce the Canadian Entitlement, but would not rise if it increases. If the AIP falls apart, the PUD settlement would cease to apply.

For Commissioner Garry Arseneault, who is nearing the end of his 12-year term, the vote carried a personal significance. He said he had been involved with the issue throughout his time on the board.

“It is a wonderful gift that you’re giving me just by having this put to bed while I’m still a commissioner, and I have a say in approving the motion,” Arseneault told staff. “So thank you all for your efforts. I appreciate that very, very much more than I can say.”

Andrew Simpson: 509-433-7626 or andrew@ward.media