FISH PROPAGATION 2015 ANNUAL REPORT

SETTLEMENT AGREEMENT ARTICLE 101 FISH PROPAGATION 2015 ANNUAL REPORT REPORTING PERIOD JANUARY 1, 2015 DECEMBER 31, 2015 BAKER RIVER HYDROELECTRIC PROJECT FERC No. 2150 November 2016 PUGET SOUND ENERGY Baker River Hydroelectric Project

CONTENTS CONTENTS 1.0 Executive Summary... 1 2.0 Introduction... 2 3.0... 2 3.1 Principal Management Activities... 2 3.2 Design and Planning Activities... 30 3.3 Documents Submitted... 30 4.0 Accounting... 31 4.1 Funding... 31 4.2 Expenditures... 31 4.3 Adjustments... 32 5.0 Supporting Documents... 32 6.0 References... 32 PUGET SOUND ENERGY Baker River Hydroelectric Project Page ii

List of Tables List of Tables Table 1. Fish Co-Managers preseason sockeye beach loading plan and actual beach loading, 2015.... 11 Table 2. 2015 Spawning Beach 4 loading records by data source (WDFW, PSE) and difference.... 12 Table 3. 2015 sockeye salmon AI loading records by data source (WDFW, PSE) and difference.... 13 Table 4. Fry production from Baker fish propagation facilities, February 1, 2015 to May 31, 2015.... 15 Table 5. Sockeye broodstock and fry production from Baker fish propagation facilities, plus subsequent smolts counted for each brood year from 1999 through 2015.... 19 Table 6. Salmon releases from Baker River fish propagation facilities, 2015.... 21 Table 7. Rearing inventory at fish propagation facilities as of December 31, 2015.... 22 Table 8. Trout releases from Baker River fish propagation facilities, 2015.... 22 Table 9. Funds allocated to nutrient enhancement account, 2012 2014 (years one to three).... 31 List of Figures Figure 1. Baker fish hatchery site layout.... 6 Figure 2. Baker fish hatchery facilities. Clockwise from top left: egg incubation, adult holding and fry transfer hoppers, outdoor rearing, early rearing.... 7 Figure 3. Baker Fish Hatchery and improved Spawning Beach 4 during operation.... 7 Figure 4. Spawning Beach 4.... 10 Figure 5. The hatchery A.I. holding facilities contained 4,101 adult sockeye in 2015, and are capable of holding up to 6,000 broodstock.... 10 Figure 6. Removing spawned and unspawned sockeye from Beach 4 at the conclusion of spawning.... 12 Figure 7. Strategies for better IHN management included changes in disinfection and the installation of isolation covers for the vertical incubators.... 17 Figure 8. Yearly sockeye artificial incubation program.... 18 Figure 9. Yearly number of sockeye fry released into the reservoirs from Baker fish propagation programs, brood years 1957-2014 (release years 1958-2015).... 20 Figure 10. Juvenile fish rearing facilities in use for sockeye and coho salmon and rainbow trout.... 23 Figure 11. Grass seed planted in 2015 at the reconstructed intake.... 24 Figure 12. Average fork length for Baker Lake age 1 sockeye smolts (2010 2015).... 25 Figure 13. Average condition factor (K) for Baker Lake age 1 sockeye smolts (2010 2015).... 25 Figure 14. Before decommissioning at the site of Spawning beaches 1, 2 and 3.... 28 Figure 15. After completion of decommissioning, in December 2014.... 29 PUGET SOUND ENERGY Baker River Hydroelectric Project Page iii

1.0 Executive Summary This annual report reviews activities undertaken by Puget Sound Energy (PSE) in 2015 to implement settlement agreement article 101, Fish Propagation (SA 101) of the Order on Offer of Settlement, Issuing New License and Dismissing Amendment Application as Moot (the license) issued by the Federal Energy Regulatory Commission (FERC) on October 17, 2008 for the Baker River Hydroelectric Project. The report covers the SA 101 reporting period of January 1 through December 31, 2015, as outlined in the revised aquatics reporting schedule submitted to the FERC on September 11, 2014, and approved by the FERC on January 16, 2015. It has been prepared in consistence with SA 102, Aquatics Reporting, and SA 101. SA 101 implementation measures during the reporting period of January 1, 2015 through December 31, 2015 included: Continuing to implement the Fish Propagation Facilities Plan (PSE, 2009a) approved by the FERC on May 26, 2010. Funding and operating fish propagation and enhancement programs for 2015 in the new Baker River fish hatchery and Sockeye Spawning Beach 4. The combined facilities produced 6.47 million fry, the second-highest total in 56 years of production from Baker River facilities, and exceeded the goal of 6 million. Approximately 4.79 million sockeye fry were from the fifth brood year operation of the new hatchery, and 1.68 million were from the operation of the improved Spawning Beach 4. As a result, 3.21 million sockeye fry were released to Baker Lake and 2.54 million sockeye fry to Lake Shannon, while a further 348,000 fry were retained for the 20,000-pound production rearing program. The performance of these facilities increased sockeye fry production more than two-fold from levels prior to 2008. In June, the hatchery and spawning beach began sixth brood year operations by receiving 2015 adult sockeye. Continuing the existing propagation and enhancement programs. The Fish Comanagers (the Sauk-Suiattle Indian Tribe, Swinomish Indian Tribal Community, Upper Skagit Indian Tribe, and Washington Department of Fish and Wildlife) kept the 20,000-pound production program s rearing goal for sockeye, coho and rainbow trout production unchanged. Allocated to this extended rearing program from the 2014 brood year were approximately 348,000 sockeye, 214,000 coho, and 20,000 rainbow trout fry. Rearing and release objectives were achieved during the reporting period that concluded December 2015. The Fish Co-managers provided PSE the Fish Co-managers Basin Plan (June 2015), as well as the Fish Propagation Plan for Brood Year 2015 (October 2015). PSE responded to both plans by letter (October 2015). Also, the Fish Co-managers are evaluating the potential re-introduction of steelhead into the Baker River system using Skagit wild stock. Approximately 11,000 steelhead are being produced and reared at the hatchery for this new initiative program while the Fish Co-managers work out a plan for these fish. Consulting with the Washington Department of Fish and Wildlife (WDFW) on fish propagation plans, hatchery operation protocols, and the continuing PSE funding of PUGET SOUND ENERGY Baker River Hydroelectric Project Page 1

Introduction fish propagation/enhancement programs and an onsite manager. PSE and the Fish Co-managers continued a Fry Release Site Technical Working Group to examine the number of usable sockeye fry release locations, identified FS 1148 road as potential option, obtained approval from the ARG and TRIG to borrow funds from SA 505 to initiate permitting for site development, and made good progress to resolve the issues that had led to the Fish Co-manager s policy on fry release sites. Finalizing and implementing a memorandum regarding procedures to be followed in managing the reservoir nutrient enhancement funding requirement in SA 101(f), including fund requests, fund disbursement, and annual reporting, as well as a mechanism for returning unspent funds to the Habitat Enhancement, Restoration, and Conservation fund. Continuing a study approach in collaboration with the ARG for monitoring adult returns and the size and number of outmigrating smolts to provide feedback on basin sockeye production limits. PSE provided a summary of results to the ARG in December 2015 from the year s adult and smolt data collection efforts. 2.0 Introduction This Fish Propagation Report has been prepared for the Baker River Hydroelectric Project (the Project), pursuant to the Order on Offer of Settlement, Issuing New License and Dismissing Amendment Application as Moot dated October 17, 2008 (the license). In the license, settlement agreement article (SA) 101, Fish Propagation (appendix A), sets forth the applicable requirements for the Fish Propagation Facilities Plan (the Plan), which in turn sets forth the requirements of this annual report. This annual report summarizes the activities conducted under SA 101 from January 1, 2015 through December 31, 2015, including management activities, monitoring, design and planning, surveys and data collection activities, consultation, documents prepared, modifications to or deviations from the Plan, issues and resolution, accounting, and purposed changes to the FERC-approved Plan. This report provides the ongoing format for future reports. 3.0 3.1 Principal Management Activities Principal activities during the 2015 reporting period (January 1, 2015 through December 31, 2015) included the following. 3.1.1 Fish Propagation Facilities Plan Per SA 101, PSE is implementing the Fish Propagation Facilities Plan, or FPFP (PSE, 2009a), which the FERC approved on May 26, 2010. The FPFP directs PSE to include information on a variety of programs and facilities in its annual SA 101 reports. A short update on each such project listed in the FPFP appears below. 3.1.1.1 Sockeye Spawning Beach 4 Construction completion has been documented, as discussed in the 2011 annual report. A Baker Fish Hatchery Renovation Final Project Completion Report dated October 5, PUGET SOUND ENERGY Baker River Hydroelectric Project Page 2

2012, including as-built drawings, was provided to the FERC within 12 months following completion of the Baker fish hatchery renovation. The facility is operating. Section 3.1.2 contains a summary. 3.1.1.2 Baker Fish Hatchery Facility Construction completion has been documented. The Baker Fish Hatchery Renovation Final Project Completion Report mentioned above covers the hatchery facility at Sulphur Springs. The facility is operating. Section 3.1.2 contains a summary. 3.1.1.3 Sockeye Smolt Capacity This study was completed during the 2010 reporting period. The final study report, including ARG comments and recommendations, was provided to the ARG and included with the 2010 annual report for SA 101. 3.1.1.4 Empirically-Derived Sockeye Production Estimate Following collaboration with the ARG, PSE implemented a study approach in April 2013 for monitoring adult returns and the size and number of outmigrating smolts to provide feedback on basin sockeye production limits. PSE developed the study approach in collaboration with the ARG to identify the number, type, and frequency of adult and smolt data collection efforts. PSE collects juvenile sockeye size information at the juvenile downstream fish passage facilities. PSE presented results of the empirical monitoring data from 2015, both numerical and morphological. Section 3.1.3 includes an update. 3.1.1.5 Sockeye Spawning Beach 4 Production Limits PSE maintains an enumeration system in Spawning Beach 4. A feasible enumeration system is necessary to evaluate production. As PSE implements the fish propagation program as directed by the Fish Co-managers, and the settlement agreement directs that population enhancement for sockeye will be sequential, production optimization testing will thus commence on a schedule to be determined in consultation with the ARG, and specifically the Fish Co-managers. At the September 2013 ARG meeting, PSE requested that the Fish Co-managers consider approaches to loading one or more spawning beach sections when setting annual broodstock goals, as a means of testing the facility s upper limits. The Fish Co-managers meet annually to establish production goals. Sockeye production has increased gradually at the hatchery, and has remained unchanged at the spawning beach since 2013. 3.1.1.6 Spawning Beaches 1 3 (Channel Creek Site) The decommissioning project per the plan and required modifications outlined in the final USFS construction punch list was completed by the end of 2014. A decommissioning plan, documentation confirming U.S. Forest Service approval of the decommissioning plan, and interim progress updates was provided in the 2013 SA 101 annual report, and progress updates made subsequently until completion of Channel Creek site decommissioning activities. PSE submitted a Channel Creek Site Decommissioning Plan in December 2012. The USDA-FS approved the final design plan dated April 18, 2013 (in their Notice to Proceed dated May 29, 2013). Project PUGET SOUND ENERGY Baker River Hydroelectric Project Page 3

construction began on July 16, 2013 in accordance to plans. Interim progress updates were provided to the ARG throughout construction. Decommissioning was completed in December 2014, including the required modifications outlined in the final USFS construction punch list. Construction completion has been documented, as discussed in the 2014 annual report. 3.1.1.7 Confirmation of Annual PSE Funding of the Fish Propagation and Enhancement Program and the Annual Fish Production Plan The Fish Co-Managers will provide PSE with an annual fish production plan. Following completion of the Baker fish hatchery renovation, PSE requested that the Fish Co- Managers provide the annual fish production plan to PSE annually by September 30 to accommodate the PSE budget, reporting processes, and timeline requirements. PSE funded the fish propagation and enhancement program during the reporting period. The Fish Co-managers provided PSE with the Fish Co-managers Basin Plan (June 2015), as well as the Fish Production Plan for Brood Year 2015 (October 2015). PSE responded to both plans by letter (October 2015). Both plans and PSE s response letter are included as supporting documents to this annual report (see section 5.0). The Fish Co-managers are evaluating the potential re-introduction of steelhead into the Baker River system using Skagit wild stock. Approximately 11,000 steelhead are being produced and reared at the hatchery for this new initiative program while the Fish Comanagers work out a plan for these fish. The Fish Co-managers provided the annual plan for brood year 2015 and reported on progress updates at the quarterly ARG meetings. The Fish Co-managers provided sufficient planning information to help PSE implement the fish production programs throughout the reporting period. The Fish Co-Managers 2015 plan is to achieve a production goal of 7 million sockeye fry, and to maintain the 20,000-pound production program s sockeye, coho, and rainbow trout production. The WDFW informed PSE of sockeye fry distribution plans for the 2015 brood year production of sockeye, directing 4.5 million fry into Baker Lake and 2.5 million into Lake Shannon, and retaining 330,000 for fall fingerling release and 7,000 for smolt release into Baker Lake (Baker River Co- Managers, 2015). PSE and the Fish Co-managers continued a technical working group to examine usable sockeye fry release locations, identified the FS 1148 road as a potential option, obtained approval from the ARG and TRIG to borrow funds in the amount of $15,000 from SA 505 to initiate Forest Service NEPA review for site development, and made good progress to resolve the issues that had led to the Fish Co-manager s policy on fry release sites. Section 3.1.3 presents the results of the fish propagation programs and the fry release site technical working group activities, and discusses the Fish Co-manager plans. Section 4.2 describes related expenditures during the reporting period. 3.1.1.8 Annual Confirmation of PSE Funding of the Reservoir Nutrient Enhancement Program Funding, which is not to exceed $60,000 annually, was placed into a PSE account for disbursements available to the Fish Co-managers. The use of funds will be at the PUGET SOUND ENERGY Baker River Hydroelectric Project Page 4

discretion of the Fish Co-managers. The process to disburse funds was initiated in 2013. PSE met with the Fish Co-managers (the Washington Department of Fisheries, Swinomish Indian Tribal Community, Sauk-Suiattle Indian Tribe, and Upper Skagit Indian Tribe) to discuss a mechanism for distributing the fund. During this reporting period, the Fish Co-managers and PSE adopted a memorandum regarding the procedures to be followed in connection with managing the fund. Section 3.1.3 includes an update. Funding is scheduled for license years 550. Funding activity during the reporting period is reported in section 4.1. 3.1.1.9 Fish Facility Operations Manual for the Sulphur Springs Site Operations procedures, including abnormal operation and maintenance procedures in accordance to PSE standards, were developed during completion of the Baker fish hatchery renovation. PSE and the Baker fish hatchery design and construction contractor, McMillen-McDougall, prepared the procedures for inclusion in the updated manual replacing the April 2009 manual completed for the previous fish culture facilities. The new procedures are in use now for the operation and maintenance of Spawning Beach 4 and the new hatchery. Living as an electronic file collection, the operations manual provides links to procedures for operations, maintenance and emergency response from the Baker Plant and hatchery and easy navigation to facility layout, descriptions and drawings, emergency, physical and biological operations, security and maintenance procedures, and makes future updates readily available. 3.1.1.10 Annual Contract and Budgeting Report Governing Operation of Fisheries Enhancement Programs This will report the annual budget and actual costs. WDFW is under a PSE contract, whereby PSE funds an onsite manager for operations. Expenditures from the WDFW contract during the reporting period are reported in section 4.2. 3.1.1.11 Fish Propagation Facilities Operations Audit The results of the fish propagation facilities and program discussed in section 3.1.3 provide an audit of the annual facilities and programs during the reporting period. The audit addresses financial accounting; fish handling and disease management operations; hazardous materials handling; and spill prevention, control, and countermeasures (SPCC) compliance. PSE, per the FERC license, developed an SPCC plan for the project. This plan was submitted to the FERC, and compliance is mandatory. At the time of this report, there have been no SPCC incidents. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 5

3.1.2 SA 101 A & B Sockeye Spawning Beach 4 and Baker Fish Hatchery PSE completed the construction of new fish culture facilities and modification of Spawning Beach 4 at Sulphur Springs by December 31, 2011, based upon the Baker Fish Hatchery Renovation 100% Final Design Documentation Report (McMillen, 2009). Final project completion is documented in the 2011 annual report. A Baker Fish Hatchery Renovation Final Project Completion Report (PSE, 2012) dated October 5, 2012, including as-built drawings, was provided to the FERC within 12 months following completion of the Baker Fish Hatchery renovation. The facilities are now in their 6 th operating year (the operating year begins each June and coincides with the brood year). Figures 1, 2, and 3 show the Baker fish hatchery site layout and the completed facilities in operation. Figure 1. Baker fish hatchery site layout. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 6

Figure 2. Baker fish hatchery facilities. Clockwise from top left: egg incubation, adult holding and fry transfer hoppers, outdoor rearing, early rearing. Figure 3. Baker Fish Hatchery and improved Spawning Beach 4 during operation. 3.1.3 Fish Propagation /Enhancement Programs This section presents the results of the fish propagation programs during 2014. The information and results also represent an audit of the existing propagation and enhancement program. The audit describes the results of biological, operational, and maintenance efforts related to fish propagation and enhancement facilities and programs, and indicates whether the program goals were met during the reporting period. The audit summarizes the production results of the sockeye spawning beach and artificial propagation facilities, as well as the production results of the coho supplementation and rainbow trout enhancement programs. The information reported includes: PUGET SOUND ENERGY Baker River Hydroelectric Project Page 7

Sockeye and coho fry production numbers. A discussion of disease management and results. Remedial responses to protect the water supply headworks from a naturally occurring landslide. Reporting related to adult returns, facility loading, production totals, and release numbers for juvenile sockeye, coho, and the other fish propagation and enhancement programs for rainbow trout. The current fish production program at the Baker River Project is directed by the Fish Co-Managers and is a combination of sockeye, coho, and rainbow trout production. The program continues the previous propagation and enhancement programs established by PSE with the WDFW, the Upper Skagit Indian Tribe, the Sauk-Suiattle Indian Tribe, and the Swinomish Indian Tribal Community, the USFWS, NOAA Fisheries, and the USDA-FS except that these programs are now contained in an improved sockeye spawning beach and the newly-constructed Baker River fish hatchery, and will enable the continued sequential development of population enhancement for sockeye and a 20,000- pound-capacity production program made up of any one or any combination of several species. Program updates, directives, and changes are provided by the Fish Co-Managers and reviewed at scheduled ARG meetings. Fish propagation and enhancement program funding and operations in the new hatchery and improved Spawning Beach 4 during 2015 were based on a production goal of 6 million sockeye fry and a juvenile rearing goal of 340,000 sockeye, 220,000 coho, and 20,000 rainbow trout. In April 2014, the Fish Co-managers initiated a steelhead research program based on a single brood year. The program designates a brood of up to eight Skagit winter steelhead, and follows the brood through their release as two-year-old smolts. The experimental program is an initial exploratory research activity expected to operate for two years; its goal is to inform future consideration regarding restoration of the Baker River steelhead run. Approximately 11,000 steelhead produced and reared at the hatchery in 2015 are reserved for this new initiative program while the Fish Co-managers work out a plan for these fish. 3.1.3.1 Sockeye Salmon Spawning Beaches Spawning Beach 4, completed in 1990 to replace the aging, isolated, and vulnerable Beaches 2 and 3, is operated as four isolated compartments (A, B, C, and D) to reduce and contain outbreaks of infectious hematopoietic necrosis (IHN), a virulent rhabdoviral disease that occurs in the wild and can typically cause high mortality in juvenile sockeye. The WDFW provides on-site management of Spawning Beach 4, with support from PSE in the form of funds and personnel. The improved Spawning Beach 4 operated for the third year during this reporting period, as the modifications required by SA 101 had been completed. These modifications included an isolated water supply, concrete barriers for compartment isolation, a new pond liner, outlet structure improvements, and cranes and concrete pads for carcass removal and better access. If the IHN virus is detected above the threshold level for any one of the compartments during routine testing, a chlorination treatment system is activated and a protocol to stop PUGET SOUND ENERGY Baker River Hydroelectric Project Page 8

collection of fry in that segment is triggered at the direction of the Fish Co-managers. The fry emerging from the infected compartment are terminated, and effluent is diverted to the chlorination treatment system in accordance with the disease management protocol developed by the Fish Co-Managers for the facility. The disease management protocol is a set of agreements on how to determine when to stop taking fry from a beach section. This protocol has been in place for the past 16 years, and is revised annually as more is learned about the disease. Viral sampling of adult sockeye that returned to the Baker River system in the fall of 2014 indicated that IHN virus was present, and detected IHN virus in adult fish placed in Spawning Beach 4 and the artificial incubation adult holding ponds. The containment features of the Spawning Beach and hatchery and the operational procedures for disease management and biosecurity procedures worked to contain and limit infection episodes. Winter/spring (2015) viral sampling of subsequently produced fry confirmed that IHN was not present in fry from Spawning Beach 4. IHN was present in sockeye fry produced from the hatchery, but was limited to three instances. Surplus adult sockeye salmon may be released into Baker Lake for spawning in the upper Baker River and its tributaries. Spawning Beach 3 operated periodically as an unattended production facility until replacement production was provided from the new Baker fish hatchery at Sulphur Springs. When it did operate, Spawning Beach 3 usually required pumping to supplement the gravity water supply. PSE provided support in the form of equipment and personnel at the request of the WDFW. The site of Spawning Beaches 1, 2, and 3 was decommissioned as a requirement of SA 101. The decommissioning project was initiated in June 2013; Spawning Beaches 1, 2, and 3 were dismantled, and the site was returned to a natural condition. 3.1.3.2 Sockeye Adult Returns (2015 Brood Year) Each year, the Fish Co-Managers based the spawning beach loading goals and artificial incubation (AI) program goals on the predicted sockeye run size and ideal loading conditions. Spawning density goals help maximize production and manage for disease. It should be noted that the WDFW directs the facility s fish propagation program objectives on behalf of the Fish Co-Managers. In 2015, the plan called for holding up to 2,200 adult sockeye in Spawning Beach 4, and 4,100 sockeye as brood stock for the artificial incubation (AI) program. A total of 32,735 sockeye returned to the Baker River adult trap during 2015. The return exceeded the Fish Co-Managers 2015 allocation for the fish propagation facilities, so 24,032 sockeye were placed into Baker Lake while 2,317 were allocated to tribal ceremonial and subsistence. A distribution methodology developed by the Fish Co- Managers allocated fish between Spawning Beach 4, the artificial incubation program, lake release, and tribal ceremonial and subsistence fishing based on representative portions of the expected run timing. Beach 4 was seeded with a total of 2,200 fish. Artificial incubation raceways were seeded with a total of 4,101 fish. Combined, the facilities were seeded with a total of 6,301 fish. The loading plan and actual loading count are reported in table 1. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 9

Figure 4. Spawning Beach 4. The beach was loaded with 2,200 adult sockeye in 2015, and is capable of holding over 3,400. Figure 5. The hatchery A.I. holding facilities contained 4,101 adult sockeye in 2015, and are capable of holding up to 6,000 broodstock. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 10

Location/Program Table 1. Fish Co-Managers preseason sockeye beach loading plan and actual beach loading, 2015. Loading Plan based on Pre-season Forecast Number of Adults Actual Loading based on Available Returns Spawning Beach 4, Section A 550 550 Spawning Beach 4, Section B 550 550 Spawning Beach 4, Section C 550 550 Spawning Beach 4, Section D 550 550 Artificial Incubation Program, Raceway 1 1,025 1,025 Artificial Incubation Program, Raceway 2 1,025 1,025 Artificial Incubation Program, Raceway 3 1,025 1,026 Artificial Incubation Program, Raceway 4 1,026 1,025 Total 6,300 6,301 a See subsequent sections for discussion of sockeye returns, hauling totals, and numbers based on WDFW carcass counts. Table 2 summarizes the WDFW carcass count according to beach and PSE hauling counts. The WDFW reported a lower carcass count (2,104) for the spawning beaches and total stocking density compared to PSE hauling records (table 2). PSE records indicate that 2,200 sockeye were delivered to the spawning beaches. The total difference between the WDFW carcass count and the PSE hauling count for Beach 4 is -96 fish. Discrepancies between WDFW records of total carcass counts and PSE hauling counts can be attributed to human error (recording error, counting other salmonids such as steelhead) and removal by predators/scavengers. The WDFW spawning beach carcass count is summarized in table 2. 1,191 female and 826 male carcasses were counted. An additional 87 unspawned females were counted, bringing the total carcass count at Beach 4 to 2,104. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 11

Table 2. 2015 Spawning Beach 4 loading records by data source (WDFW, PSE) and difference. WDFW Carcass Count Record Beach 4A PSE Hauling Count Females 301 Females n/a Males 198 Males n/a Unspawned Females 27 Unspawned Females n/a Difference (WDFW-PSE) a Total 526 Total 550-24 Beach 4B Females 305 Females n/a Males 208 Males n/a Unspawned Females 22 Unspawned Females n/a Total 535 Total 550-15 Beach 4C Females 303 Females n/a Males 204 Males n/a Unspawned Females 19 Unspawned Females n/a Total 526 Total 550-24 Beach 4D Females 282 Females n/a Males 216 Males n/a Unspawned Females 19 Unspawned Females n/a Total 517 Total 550-3 Combined Beach 4 Females 1,191 Females n/a Males 826 Males n/a Unspawned Females 87 Unspawned Females n/a Sum of Beach 4 2,104 Sum of Beach 4 2,200-96 a Carcass counts are considered more reliable data and are therefore utilized for management calculations such as estimation of egg production at the beaches. Figure 6. Removing spawned and unspawned sockeye from Beach 4 at the conclusion of spawning. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 12

Table 3. 2015 sockeye salmon AI loading records by data source (WDFW, PSE) and difference. WDFW Carcass Count Record AI Raceway 1 PSE Hauling Count Females 538 Females n/a Males 441 Males n/a Unspawned Females 40 Unspawned Females n/a Difference (WDFW-PSE) a Total 1,019 Total 1,025-6 AI Raceway 2 Females 529 Females n/a Males 341 Males n/a Unspawned Females 131 Unspawned Females n/a Total 1,001 Total 1,025-24 AI Raceway 3 Females 486 Females n/a Males 372 Males n/a Unspawned Females 148 Unspawned Females n/a Total 1,006 Total 1,026-20 AI Raceway 4 Females 528 Females n/a Males 357 Males n/a Unspawned Females 103 Unspawned Females n/a Total 988 Total 1,025-37 Combined AI Females 2,081 Females n/a Males 1,511 Males n/a Unspawned Females 422 Unspawned Females n/a Sum of AI 4,014 Sum of AI 4,101-87 a Carcass counts are considered more reliable data and are therefore utilized for management calculations such as estimation of egg production at the beaches. 3.1.3.3 Sockeye Artificial Incubation Program This hatchery program, which as a pilot program had produced 1 million fry annually in temporary incubation facilities, has now expanded to the newly-constructed fish culture facilities as phase 1 in SA 101. The facilities will enable the sequential development of additional population enhancement for sockeye up to the capacity for 7 million fry annually, and will provide added protection in the event of losses from infectious hematopoietic necrosis (IHN). The combined 2015 production (2014 brood year) for the spawning beach and the artificial incubation facility resulted in more than 6 million fry (6,468,812), including 348,000 fry reserved for a delayed-release experiment in the hatchery. The combined PUGET SOUND ENERGY Baker River Hydroelectric Project Page 13

2016 fry production (2015 brood year), which is anticipated to be 7 million, will be totaled in early 2016, and therefore will be reported in the 2016 annual report. PSE will take a sequential approach for scheduling and increasing future sockeye fry production per SA 101 (c), Sequential Development of Sockeye Population, using both the spawning beach program and the artificial incubation (AI) program for enhancement. In this approach, PSE would provide for facility operations as directed by the Fish Co-managers, with sequential increases of approximately 1 million fry per year until either Spawning Beach 4 plus phase 1 of the artificial incubation program reach their maximum capacity, or the Baker River system reaches its maximum capacity. 3.1.3.4 Sockeye Egg Production (2015 Brood Year) Spawning Beach 4 (SB4). Based on the carcass counts of spawned females and using an average fecundity of 3,000 eggs, as previously determined for the Baker River stock, it is estimated that approximately 3,573,000 eggs were deposited into the spawning beach gravels. Artificial incubation (AI). According to WDFW records, from 2,081 spawned females, the AI program yielded a total of 5,537,643 eyed-eggs which had developed on vertical stack egg incubation trays supplied by the hatchery. 3.1.3.5 Sockeye Fry Production (2014 Brood Year) Spawning Beach 4. According to WDFW records, the spawning beach program produced approximately 1,677,815 fry between February and May 2015 for the 2014 brood year (table 4). These fry after emerging from the beach gravel emigrate through electronic counters to a collection hopper and are transported as unfed fry. Artificial Incubation. According to WDFW records, the AI program produced approximately 4,790,997 fry between February and May 2015, released 4,074,148 fry into the reservoirs, and retained 348,453 for a delayed-release experiment in the hatchery, satisfying the fry production objectives established by the Fish Co-Managers for the artificial incubation program (table 4). In 2015, AI-program-produced fry were held and fed for up to 10 days. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 14

Table 4. Fry production from Baker fish propagation facilities, February 1, 2015 to May 31, 2015. Production Year Feb. - May 2015 2014 sockeye Feb. - May 2015 2014 sockeye Feb. - May 2015 2014 sockeye Feb. - May 2015 2014 coho Brood Year Species Program Stock Number Artificial Incubation Spawning Beach Extended Rearing Extended Rearing Release Size Baker 4,074,148 a fed fry Release Site Baker Lake, Lake Shannon Baker 1,677,815 b unfed fry Baker Lake Baker 348,453 c fed fry (see table 6) Baker 214,322 d fed fry (see table 6) a Approximately 1,579,548 were released in Baker Lake, 2,494,600 were released in Lake Shannon. b All were counted into Baker Lake, during the annual end-of-season shutdown, an estimated 50,000 residual remaining fry were released into Lake Shannon. c Approximately 348,453 were held in the extended rearing program to be released in November 2015 (table 6). d Approximately 144,235 were released as fry in Lake Shannon June 2015, approximately 65,000 were held in the extended rearing program to be released in May 2016 (table 6). 3.1.3.6 Sockeye Fry Disposition (2014 Brood Year) Spawning Beach 4. The Fish Co-Managers determine the allocation percentages of fry to Lake Shannon and Baker Lake. According to WDFW records, most (97.0%) of the unfed Spawning Beach 4 fry (1,627,815) were released into Baker Lake. The other 3.0% that went into Lake Shannon consisted of approximately 50,000 residual remaining fry that were released into Lake Shannon when Beach 4 was shut down for the season. Artificial Incubation. The Fish Co-Managers determine the allocation percentage of fry to Lake Shannon and Baker Lake. According to WDFW records, 1,579,548 (35.7%) fed fry from the artificial incubation program were released into Baker Lake, and 2,494,600 (56.4%) fed fry from the artificial incubation program were released into Lake Shannon. Artificial incubation fry were transported to swim-up troughs and fed for one to three weeks before release into Baker Lake and Lake Shannon. The holding was intended to allow the fry to swim up and become active before release, to develop foraging behavior, to time the release to the forage base population and coordinate with operational activities. Of these, 348,453 fed fry (7.9%) from the artificial incubation program are being reared for use in future studies and for continuing fish propagation and enhancement programs. 342,554 juvenile sockeye were released after extended rearing at the hatchery: from the 2014 brood year, 332,579 ad-clipped fish at 31-43 fish per pound (fpp) were released into Baker Lake in November and December 2015; from the 2013 brood year, 3,290 adclipped fish at 17 fpp were inserted with a passive integrated transponder (PIT) and used to study Lower Baker fish passage beginning in March 2015 (table 6); 2,043 ad-clipped fish at 15 fpp were inserted with a PIT and used to study Upper Baker fish passage beginning in March 2015 (table 6); and 4,642 ad-clipped fish at 22 fpp not PIT tagged were release to Baker Lake (table 6). All fish were raised to appropriate release sizes and released on schedule. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 15

Winter/spring (2015) sockeye fry production was significantly affected by infectious hematopoietic necrosis (IHN). Viral sampling indicated that IHN virus was carried in adult sockeye that returned to the Baker system in the fall of 2014, and detected IHN virus in adult fish placed in Spawning Beach 4 and in the artificial incubation adult holding ponds. The containment features of the spawning beach and hatchery, operational procedures for disease management, and biosecurity procedures worked to contain and limit infection episodes in subsequent fry production. Winter/spring (2015) viral sampling confirmed that IHN was not present in fry produced from Spawning Beach 4. There were, however, outbreaks of IHN infection in the artificial incubation program. The outbreaks were limited to three incidents, resulting in loss in trays (161,676), loss in fry swim-up (68,600), and fry euthanized (306,966) for an estimated total loss of 537,242. A summary is provided in the next section. 3.1.3.7 IHN summary (2014 Brood Year) Spawning Beach 4. No IHN was detected in Beach 4 sockeye fry in 2015. Artificial Incubation. There were IHN outbreaks in 3 lots of sockeye fry in 2015 confined to 1 incubation room, resulting in a significant loss of approximately 537,242 sockeye fry. With good disinfection of eggs, the incidence of IHN breakout in fry is rare, but when it does happen it can be severe. The key strategy for IHN after hatching is containment, which was designed into the hatchery, and it has been working well once the swim-up fry are out of the incubation rooms. PSE, a WDFW hatchery manager, and agency pathologists conducted a thorough debrief of the outbreaks. The review of the outbreaks in the incubation area revealed vulnerability to cross-contamination from splashing between incubation stacks. This containment breach may explain the multiple outbreaks in one incubation room. Front covers for the incubator stacks have now been installed to improve incubator containment. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 16

Figure 7. Strategies for better IHN management included changes in disinfection and the installation of isolation covers (as seen on the left stacks) for the vertical incubators. 3.1.3.8 Sockeye Fry Production and Distribution (2015 brood year) It is expected that the Spawning Beach 4 segments will produce roughly 2 million sockeye fry, and that the artificial incubation program will produce roughly 5 million fry from the 2014 brood year. The WDFW informed PSE of approximate distributions of those 7 million fry in a sockeye fry distribution plan for the resulting 2015 brood year production of sockeye, directing 4.50 million fry into Baker Lake and 2.5 million into Lake Shannon and retaining 330,000 (with adipose mark) for extended rearing for fall par release into Baker Lake of which 7,000 raised to smolt for passage studies (Baker River Co-Managers, 2015). PUGET SOUND ENERGY Baker River Hydroelectric Project Page 17

3.1.3.9 Yearly Sockeye Fry Propagation Sockeye fry recruitment to the reservoirs since 1957 has come from four constructed spawning beaches, hatchery production using artificial incubation, and limited natural spawning. Figure 8 shows the collection of eggs for the sockeye artificial incubation program. Figure 9 shows the trend of fry releases from spawning beaches and hatchery production. Levels have increased significantly since the new Baker Hatchery began operation. Table 4 lists the most recent sockeye fry production from brood years dating back to 1999. PSE implemented a study approach April 2013 to monitor the numerical response to increased fry production. The approach to monitoring includes an annual accounting of the empirical data in this table. This includes fry production, plus subsequent smolts counted. During 2015, the total yearly sockeye fry propagation from the Baker Hatchery was 6,468,812, making 2015 the 6 th consecutive year in which fry production exceeded 5 million. The total was a two-fold increase from levels prior to 2008, and the secondhighest in 56 years of production from Baker River facilities. Figure 8. Yearly sockeye artificial incubation program. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 18

Brood year Table 5. Sockeye broodstock and fry production from Baker fish propagation facilities, plus subsequent smolts counted for each brood year from 1999 through 2015. Spawning beach spawned females Counted fry out of Spawning Beach 4 Estimated fry from Spawning Beach 3 AI spawned females Egg take for AI Fry produced from AI Fry to Baker Lake Fry to Lake Shannon Smolts from Baker Lake a Smolts from Lake Shannon a 1999 1,393 1,856,639 222,000 2,078,639 194,537 418 2000 1,770 3,281,896 323,000 3,604,896 140,021 9,460 2001 1,017 1,316,042 227,000 1,543,042 70,414 412 2002 1,677 1,537,065 323,000 228 693,305 663,950 2,259,540 264,475 166,698 4,122 2003 1,854 2,089,175 308,000 348 734,262 758,944 2,971,059 185,060 113,767 3,316 2004 1,662 1,638,138 239,000 438 1,212,800 1,188,524 2,801,902 263,760 284,494 4,810 2005 971 1,656,858 0 490 1,157,300 1,134,742 2,791,600 0 117,014 41,250 2006 1,807 1,990,183 0 475 1,246,190 1,224,356 2,914,539 300,000 252,416 588 2007 850 1,892,677 0 298 953,718 921,940 2,814,617 0 335,353 7,588 2008 1,161 1,326,437 0 330 993,454 965,506 2,291,943 0 435,297 1,290 2009 1,713 3,511,564 0 465 1,713,599 1,596,630 5,108,194 0 203,550 5,958 2010 0 0 0 1,637 5,199,858 5,089,860 4,139,680 950,180 452,612 17,307 2011 589 1,158,025 0 1,690 5,072,919 4,368,735 3,558,264 2,000,010 577,085 181,234 2012 1,415 2,100,202 0 1,298 3,375,845 3,262,645 3,836,878 1,349,520 564,432 375,447 2013 1,013 1,828,946 0 2,124 4,893,032 4,761,302 3,775,057 1,948,131 477,169 223,588 2014 887 1,677,815 b 1,896 5,098,985 4,790,997 3,207,363 2,544,600 c c 2015 1,191 c b 2,081 5,637,643 c c c c c a Counts include all sockeye outmigrants (wild produced and Baker propagation facilities) but do not reflect smolt production by brood year because the majority of smolts outmigrate at age 1. b Spawning beaches 1, 2 and 3 were decommissioned in 2014; facilities no longer exist. c Remains to be determined. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 19

Figure 9. Yearly number of sockeye fry released into the reservoirs from Baker fish propagation programs, brood years 1957-2014 (release years 1958-2015). 3.1.3.10 Coho Supplementation program The coho supplementation program continues to produce juvenile coho from the stock of naturally-reproduced wild origin coho adults in the Baker River system for use in studies and for the ongoing fish propagation and enhancement objectives determined by the Fish Co-Managers. Approximately 65,000 fry were allocated for extended rearing and release as yearlings in the spring of 2015 to continue migration experiments and contribute to adult returns. These fry, reared in raceways at the Baker hatchery, resulted in a total of 62,013 yearlings. Of these fish, 3,280 (22 fpp) were released into net pens in Lake Shannon and 2,185 (22 fpp) were released into net pens in Baker Lake to be used for juvenile passage biological studies. The remaining 56,548 yearling fish (20 fpp) were released below both dams into the Baker River stress relief ponds (SRP) in May 2015 to contribute to future fall adult returns. All fish were raised to appropriate sizes and released on schedule (table 5). PUGET SOUND ENERGY Baker River Hydroelectric Project Page 20

Release Date Table 6. Salmon releases from Baker River fish propagation facilities, 2015. Brood Year Species Stock Number Size (fish/lb.) Pounds Planted Release Site Jan 20, 2015 2013 sockeye Baker 4,642 22 209 Baker Lake March 12, 2015 2013 sockeye Baker 3,290 17 189 Shannon Pens March 18, 2015 2013 sockeye Baker 2,043 15 140 Baker Pens March 25, 2015 2013 coho Baker 2,185 22 100 Baker Pens March 25, 2015 2013 coho Baker 3,280 22 148 Shannon Pens May 5, 2015 2013 coho Baker 56,548 20 2,799 SRP June 17, 2015 2014 coho Baker 144,235 352 410 Lake Shannon Nov 19, 2015 2014 sockeye Baker 70,599 31 2,277 Baker Lake Nov 20, 2015 2014 sockeye Baker 87,437 41 2,133 Baker Lake Nov 20, 2015 2014 sockeye Baker 86,875 42 2,068 Baker Lake Nov 20, 2015 2014 sockeye Baker 86,804 43 2,019 Baker Lake Dec 29, 2015 2014 sockeye Baker 864 31 28 Baker Lake Total Releases 548,802 12,520 3.1.3.11 Coho Adult Returns (2015 Brood Year) A total of 1,856 coho adults returned to the Baker River trap in 2015, of which 208 were removed from the trap for the supplementation program. These fish were held at the Baker hatchery until sexually mature and then spawned. From this broodstock, 99 coded wire tags were recovered from their carcasses for stock identification. 3.1.3.12 Coho Egg and Fry Production (2014 Brood Year) For the 2014 brood year (2015 fry production), 89 Coho females were spawned and an estimated total of 218,744 eyed eggs were incubated at the hatchery. An inventory of fry based on eyed egg weight samples less ponding loss provided a count of 214,322. Approximately 65,000 fry will be allocated to the extended rearing program (the program goal is ~60,000), resulting in a surplus of Coho fry. The 144,235 surplus fry (~350 fpp) were released into Lake Shannon at Sulphur Creek in June 2015. More recent enumeration estimated that 56,650 fry were allocated for extended rearing and will be released as yearlings (~20 fpp) in the spring of 2016 to continue migration experiments and contribute to adult returns. From these 3,200 will be used for juvenile passage biological studies (annual mark-recapture, reservoir migration response). The remaining 53,450 yearling fish will be released into the Baker River stress relief ponds below both dams to contribute to future fall returns. A salmon rearing inventory is shown in table 7. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 21

Planned Release Date Table 7. Rearing inventory at fish propagation facilities as of December 31, 2015. Brood Year March 2016 2014 Sockeye March 2016 2014 Coho March 2016 2014 Species Program Stock Inventory Steelhead a May 2016 2014 Coho Spring/Summer 2016 2014 Rainbow a Directed as a unique Fish Co-manager initiative. Extended Rearing (PIT) Extended Rearing (PIT) Extended Rearing Extended Rearing Extended Rearing Planned Release (fish/lb.) Baker 3,169 20 Baker 3,176 20 Planned Release Site Baker/ Shannon Baker/ Shannon Skagit 11,420 15 Baker Baker 53,474 20 SRP Golden dale 25,152 3 Depression and various lakes 3.1.3.13 Rainbow Trout Production WDFW provided 25,196 rainbow trout fingerlings from the 2014 brood year for the rearing program in July 2015. These fish will be released in 2016. The rearing program contributes catchable-sized rainbow trout for local recreational fishing and for derbies. PSE supplies labor, rearing facilities, and food until the last release. During 2015, 19,160 catchable fish were released. Approximately 14,960 rainbow trout (from the 2013 brood year) were released into Depression Lake for recreational fishing, and 3,000 rainbow trout were released into Grandy Lake as an expansion of this recreational fishing program. 1,200 trout were allocated to the Upper Skagit Indian Tribe. All fish were raised to appropriate target sizes averaging less than 3 fpp, and were released on schedule (table 8). Figure 10 shows juvenile fish rearing for the 20,000 pound capacity production program directed by the Fish Co-managers annual fish production goals. Table 8. Trout releases from Baker River fish propagation facilities, 2015. Release Date Brood Year Species Stock Number Size (fish/lb.) Pounds Planted Release Site March 11, 2015 2013 rainbow Gold a 3,000 3 1,000 Grandy April 22, 2015 2013 rainbow Gold a 5,039 2.2 2,290 Depression May 6, 2015 2013 rainbow Gold a 1,200 2.4 500 USIT May 20, 2015 2013 rainbow Gold a 5,000 2.3 2,173 Depression June 30, 2015 2013 rainbow Gold a 4,815 1.6 3,009 Depression Aug 15, 2015 2013 rainbow Gold a 106 1 106 Depression Total Releases 19,160 9,078 a Goldendale. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 22

Figure 10. Juvenile fish rearing facilities in use for sockeye and coho salmon and rainbow trout. Raceways and rectangular and circular tanks are provided for program flexibility and multiple species. 3.1.3.14 Facilities Operations Monitoring Repairs to Water Supply Landslide activity over the years has at times adversely affected the water intake and supply system for the spawning beach and hatchery. Because of the potential for soil slippage at the springs supplying water to the fish production facilities, turbidity events are monitored by alarm systems. Past events have resulted in temporary turbidity excursions in the water supply. PSE has responded to these by switching to an alternate (domestic) water supply until the primary supply could be restored. To address these events, new sand separators were installed as part of the Baker fish hatchery renovation. These sand separators protect the water supply by removing sediment both under normal conditions and following a landslide event. However, large and sudden soil slippage events, such as one that occurred in December 2012, can overwhelm the sand separators. PSE removed debris, cleared, and repaired the site of the hatchery headworks. The reconstructed intake now collects and conveys spring water to a headworks box free from sediment. PSE is working with the USDA-FS and WDFW to implement longer-term erosion control measures. In 2015, PSE planted grass seed in the construction area and is monitoring the effectiveness of the re-vegetation, and any new slope activity (figure 11). The present erosion control measures kept the water supply clear and protected. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 23

Figure 11. Grass seed planted in 2015 at the reconstructed intake. The intake collects and conveys spring water to the headworks box and Sulphur Creek free from sediment. 3.1.3.15 Empirically-Derived Production Limits for Sockeye Salmon PSE implemented a study approach in April 2013 for monitoring adult returns and the size and number of outmigrating smolts to provide feedback on basin sockeye production limits (PSE, 2013). The study is intended to inform plans for future fry stocking within the Baker system. PSE developed the study approach in collaboration with the ARG to establish the number, type, and frequency of adult and smolt data collection efforts (PSE collects juvenile sockeye size information at the juvenile downstream fish passage facilities). On December 16, 2015, PSE submitted to the ARG a summary of empirical data, both numerical and morphological, from monitoring during the 2015 outmigration period. Numbers of fry, numbers of outmigrating smolts, and numbers of returning adult sockeye were provided in tables. A total of 700,757 sockeye smolts, the third-highest on record, were counted in 2015. PSE presented the length, weight, and condition (kfactor) of smolts in graphs. In 2015, the Baker Lake age 1 average size was 111 mm, and the average condition was 0.94, both increases from 2014. In Lake Shannon, age 1 average size was 133 mm, and average condition was 0.99, also increases. Figure 12 PUGET SOUND ENERGY Baker River Hydroelectric Project Page 24

shows Baker Lake age 1 average size from 2010 2015. Figure 13 shows Baker Lake age 1 average condition factor from 2010 2015. The complete data summary presentation is attached to this report (see section 5.0, Supporting Documents ). Average Length - "Age 1" (2 Wk May - 2 Wk June) - UPPER BAKER 130 125 Fork length (mm) 120 115 110 105 100 95 90 114 mm 109 mm 108 mm 106 mm 107 mm 111 mm 2010 2011 2012 2013 2014 2015 Figure 12. Average fork length for Baker Lake age 1 sockeye smolts (2010 2015). Average Condition factor - "Age 1" (2 Wk May - 2 Wk June) - UPPER BAKER 1.05 Condition factor (K) 1.00 0.95 0.90 0.85 0.80 0.95 0.94 0.92 0.91 0.91 0.94 2010 2011 2012 2013 2014 2015 Figure 13. Average condition factor (K) for Baker Lake age 1 sockeye smolts (2010 2015). PUGET SOUND ENERGY Baker River Hydroelectric Project Page 25

3.1.3.16 Fry Release Site Technical Working Group In 2014, the Fish Co-managers and PSE convened a technical working group to identify options and establish a path forward to resolving the issues related to the number of usable release sites. Important discussions were held to brainstorm options, identify areas to research, and consider potential funding mechanisms. The meetings have produced a good understanding of each stakeholder s interests. The technical working group met three times during 2015 (January 13, February 24, and June 9). The group continued working through various issues specific to the options, including potential funding sources, permitting, and contingency plans. Redevelopment of an old road site (formerly USDA-FS 1148) has been identified as a viable option. The road continues into the Baker reservoir depending on pool height and provides release access at all pool levels. Fry could be released from either side of the road, thus providing several release sites from one road. A decision regarding potential funding for a Forest Road 1148 fry release site was presented at the October 2015 ARG meeting. The decision to authorize $15,000 in funding for a USDA Forest Service NEPA review of Forest Road 1148 fry release site development was approved. These funds will initially come from the SA 505 planning and site evaluation funds, and will be reimbursed from Habitat Enhancement, Restoration, and Conservation (HERC) funds in October 2017, when the HERC funds ($50,000) become available under SA 602. The amount reimbursed will be for the amount above plus interest accrued based on the accrual rate specified in SA 602. When $50,000 of HERC funds come due in October 2017, $15,000 plus interest will be transferred to the SA 505 planning and site evaluation funds, and the balance will go to the HERC fund. PSE is working with the USFS and the Upper Skagit Indian Tribe on development the Forest Road 1148 fry release site. Construction is scheduled to commence in March 2017. In the meantime, there is design, planning, and permitting, and particularly the NEPA review, which will take about 18 months. 3.1.3.17 Baker Basin Plan and Fish Production Plan PSE received the Baker River Fish Co-Managers Basin Plan (June 2015), as well as the Fish Propagation Plan for Brood Year 2015 (October 2015). The Basin Plan combines objectives from different fish management agencies in the Baker Basin into a single consistent message. The Basin Plan provides insight into the Fish Co-managers plans for managing the various fish populations in the Baker Basin. The Fish Propagation Plan is also useful for planning the needed supplies to support operations for 2016. PSE replied to the Fish Co-managers in October 2015, thanking them for the opportunity to provide feedback and ask questions about the plans. Both plans discussed the Fish Co-managers initiative for undertaking a small-scale pilot project using Skagit steelhead produced at the Baker River hatchery. PSE responded with technical comments and questions regarding PSE s role in the Fish Co-manager plans for Chinook salmon and steelhead. Both plans also referred to otolith marking of sockeye fry at the hatchery. PSE referred to previous detailed responses that continue to reflect and explain PSE s response to the Fish Co-manager s request to install a water chiller system at the Baker River hatchery. Finally, PSE replied with clarification on the scope of SA 101. The basin plan stated the Annual Production Plan directs PSE s implementation of PUGET SOUND ENERGY Baker River Hydroelectric Project Page 26

Settlement Agreement Article 101. PSE suggested that the plans be edited to say that the Annual Fish Production Plan is provided to PSE in accordance with the FERCapproved Fish Propagation Facilities Plan and SA 101(e). 3.1.3.18 Nutrient Enhancement Fund SA 101(f) The license requires PSE to make funding available for the implementation of a reservoir nutrient enhancement program. Annual funding prescribed by SA 101(f) for nutrient enhancement was made available in 2012 (the first year of deposit), and will accrue at $60,000 per year (escalated from 2006 dollars; see section 4.1) each year from the date of license issuance. On September 22, 2015, PSE and the Fish Co-managers adopted a memorandum (see supporting document to this report) that describes the procedures to be followed in managing the fund, such as fund requests, fund disbursement, and annual reporting, as well as a mechanism for returning unspent funds to the Habitat Enhancement, Restoration, and Conservation (HERC) fund. A copy of the memorandum was provided to the ARG. 3.1.4 SA 101 d Maintain, Then Restore Natural Conditions at Spawning Beaches 1, 2, and 3 Before the renovation and construction of the Baker fish hatchery was complete, PSE initiated discussion with the USDA-FS to develop a decommissioning plan that outlines decommissioning procedures for the site of Sockeye Spawning Beaches 1, 2, and 3. PSE consulted with the USDA-FS towards an understanding of the decommissioning requirements. PSE and the USDA-FS sought input from the ARG and the Cultural Resources Advisory Group (CRAG). The following restoration and decommissioning goals were identified (Anchor QEA, 2012): Salmon Spawning Habitat: Provide spawning habitat for adult salmon throughout the existing natural channel in the project area (to the most practicable extent). Maintain Pond Hydrology: Maintain the open water component of the upstream pond by implementing some type of downstream grade control structure (or similar) to help maintain pond water elevations. Overflow Swale: Provide an overflow swale to direct overflows from the upstream pond to the downstream pond and channel. This will prevent water from flowing overland to the south away from the channel and pond network. Remove Infrastructure: All surface and subsurface infrastructure constructed and installed as part of the spawning beaches will be removed and hauled off-site for appropriate disposal or recycle. Decommission Gravel Surfacing: The gravel surfacing within the site will be decommissioned to USFS standards (roadway decommissioning may involve removal of the gravel surface and the sub-base scarified to a depth of approximately 1 foot). Re-grade Site: Upon removal of the site facilities (surface and subsurface), the site will be re-graded to emulate natural, pre-facility grades and contours. Cut and Fill Volume: Decommissioning will generate cut and fill. To the extent practicable, cuts and fills will be balanced on-site to minimize or eliminate the need for the import and export of fill materials. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 27

The final design (Anchor QEA, 2013), included enhancement along the existing Channel Creek alignment with grade control (large woody debris structures) placed in the channel to help maintain the water surface elevations in the upstream pond. In addition, an overflow swale will connect the upstream pond to the downstream pond to help keep water in the existing channel and pond complex. The overflow swale will provide a flow pathway during higher-flow drainage events, and if beaver activity in the main channel creates backwater conditions (with the potential for overflow) in the pond. PSE received documentation ( Notice to Proceed ) confirming that the USDA-FS had completed its review of the plan and had approved the decommissioning (USDA-FS, 2013). Construction began on July 16, 2013. PSE completed the decommissioning project at the end of 2014 and the required modifications outlined in the final USFS construction punch list. Final project completion is documented in the 2014 annual report. PSE is re-drawing the FERC project boundary to exclude the site of the former beaches. Figures 14 and 15 show the site before decommissioning and after completion in December, 2014. Figure 14. Before decommissioning at the site of Spawning beaches 1, 2 and 3. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 28

Fish Propagation 2015 Annual Report Figure 15. After completion of decommissioning, in December 2014. BAK SA 101 Annual Report 2015.Docx PUGET SOUND ENERGY Baker River Hydroelectric Project 15 November 2016 Page 29