FISH PROPAGATION 2012 ANNUAL REPORT

SETTLEMENT AGREEMENT ARTICLE 101 FISH PROPAGATION 2012 ANNUAL REPORT REPORTING PERIOD JUNE 1, 2012 MAY 31, 2013 BAKER RIVER HYDROELECTRIC PROJECT FERC No. 2150 December 2013 BAK SA 101 Annual Report 2012.Doc PUGET SOUND ENERGY Baker River Hydroelectric Project Doc ID: BAK.2013.1219.0615.PSE.FERC-DC 19 December 2013

CONTENTS CONTENTS 1.0 Executive Summary... 1 2.0 Introduction... 1 3.0... 2 3.1 Principal Management Activities... 2 3.2 Design and Planning Activities... 24 3.3 Documents Submitted... 24 4.0 Accounting... 25 4.1 Funding... 25 4.2 Expenditures... 25 4.3 Adjustments... 26 5.0 Supporting Documents... 26 6.0 References... 26 7.0 Review Comments and Responses... 27 7.1 Distribution List... 28 7.2 Transmittal Message... 29 7.3 Summary of Reviewer Replies... 29 Doc ID: BAK.2013.1219.0615.PSE.FERC-DC 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, 2012.... 10 Table 2. 2012 sockeye salmon beach loading records by data source (WDFW, PSE) and difference.... 11 Table 3. One approach for sequential sockeye development at production facilities at Sulphur Springs, 2012 to 2016... 12 Table 4. Salmon production from Baker fish propagation facilities, June 1, 2012 to May 31, 2013.... 13 Table 5. Sockeye broodstock and fry production from Baker fish propagation facilities, plus subsequent smolts counted for each brood year from 1999 through 2011.... 15 Table 6. Salmon releases from Baker River fish propagation facilities, June 1, 2012 to May 31, 2013.... 16 Table 7. Salmon rearing inventory at fish propagation facilities as of May 31, 2013... 17 Table 8. Funds allocated to nutrient enhancement account, 2012 2013 (1 st year)... 25 Table 9. ARG representatives who received the draft Fish Propagation 2012 Annual Report as part of the SA 102 review process... 28 List of Figures Figure 1. Baker fish hatchery site layout... 5 Figure 2. Baker fish hatchery constructed facilities... 6 Figure 3. Baker Fish Hatchery and improved Spawning Beach 4 during operation.... 6 Figure 4. Spawning Beach 4... 9 Figure 5. The hatchery holding facilities contained 2,750 adult sockeye in 2012, and are capable of holding up to 6,000 broodstock.... 9 Figure 6. Yearly number of sockeye fry released into the reservoirs from Baker fish propagation programs, 1957-2013.... 15 Figure 7. Juvenile fish rearing facilities in use for sockeye and coho salmon and rainbow trout... 18 Figure 8. December 2012 landslide debris, debris removal, and riprap cleaning and replacement.... 19 Figure 9. Aerial view of the site of Spawning Beach 1, 2, and 3... 21 Figure 10. Existing conditions at Spawning Beaches 1, 2, and 3. (PSE, 2013)... 22 Figure 11. Conditions at completion of decommissioning (April 18, 2013 design), showing infrastructure removed, site regrading, large woody debris structures in the channel alignment, and an overflow swale... 23 Figure 12. E-mail message from PSE accompanying the Fish Propagation 2012 Annual Report.... 29 Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page iii

1.0 Executive Summary This annual report reviews activities undertaken by Puget Sound Energy (PSE) during the reporting period of June 1, 2012 May 31, 2013 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. It has been prepared in consistence with SA 102, Aquatics Reporting, and SA 101. The report covers the SA 101 reporting period of June 1, 2012 through May 31, 2013, as outlined in the reporting schedule contained in SA 102. In this reporting period, PSE efforts under SA 101 included: Continuing to implement the Fish Propagation Facilities Plan in accordance with the plan s schedule. Submitting the Baker Fish Hatchery Renovation Final Project Completion Report (October 5, 2012) to the FERC in accordance with SA 101 and the Fish Propagation Facilities Plan. Developing a Channel Creek Site Decommissioning Plan (December 2012), receiving documentation confirming U.S. Department of Agriculture Forest Service (USDA-FS) approval ( Notice to Proceed ) of the final design plan dated April 18, 2013, with construction to begin on July 16, 2013. Funding and operating fish propagation and enhancement programs for 2012 in the new hatchery and Sockeye Spawning Beach 4, and achieving a combined production of 5.3 million fry from a goal of 6 million. Approximately 3.2 million sockeye fry were from the third-year operation of the new hatchery, and 2.1 million were from the second-year operation of the improved Spawning Beach 4. Performance of these facilities increased sockeye fry production two-fold from levels prior to 2008. Reviewing conditions, planning, and initiating repairs to the Sulphur Springs water supply intake to control further sediment infusion by installing a graded filter following a significant landslide in December 2012. The filter materials were selected to cap the hatchery water intake area, shielding it from sliding materials in the event of a new landslide. Implementing 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 developed a study approach in collaboration with the ARG that identifies the number, type, and frequency of 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 Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 1

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 June 1, 2012 through May 31, 2013, 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 2012 reporting period (June 1, 2012 through May 31, 2013) included the following (which are described in greater detail in sections 3.1.1 through 3.1.5). Continuing to implement the Fish Propagation Facilities Plan approved by the FERC on May 26, 2010. Filing the Baker Fish Hatchery Renovation Final Project Completion Report (October 5, 2012) to the FERC in accordance with SA 101 and the Fish Propagation Facilities Plan. Consulting with the U.S. Department of Agriculture Forest Service (USDA-FS) and ARG while developing a Channel Creek Site Decommissioning Plan (December 2012), receiving documentation confirming USDA-FS approval ( Notice to Proceed ) of the final design plan dated April 18, 2013, with construction to begin on July 16, 2013. Operating the newly-constructed fish culture facilities at the Sulphur Springs site for the third year, releasing 3.85 million sockeye fry to Baker Lake and 1.33 million sockeye fry to Lake Shannon, and retaining 0.13 million fry for the 20,000-pound production rearing program. Continuing the existing propagation and enhancement programs. The 20,000-pound production program, as determined by the Fish Co-managers (the Sauk-Suiattle Indian Tribe, Swinomish Indian Tribal Community, Upper Skagit Indian Tribe, and the Washington Department of Fish and Wildlife), remained unchanged from 2011 (status quo) for sockeye, coho, and rainbow trout production. Allocated to this extended rearing program were approximately 130,000 sockeye, 60,000 coho, and 20,000 rainbow trout fry. Rearing and release objectives were achieved during the reporting period. Cleaning and making repairs to the hatchery headworks infiltrated by a landslide in December 2012. PSE reviewed conditions, designed a repair method, and consulted with the USDA-FS. On May 28, 2013, the USDA-FS approved PSE s plan to repair the Sulphur Springs by capping the water supply intake with a graded filter to control further sediment infusion and shield the intake from sliding materials in the event of a new landslide. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 2

Consulting with the Washington Department of Fish and Wildlife (WDFW) on fish propagation plans, hatchery operational protocols, and the continuing PSE funding of fish propagation/enhancement programs and an onsite manager. Consulting with the ARG to implement a study approach that identifies the number, type, and frequency of adult and smolt data collection efforts to provide feedback on basin sockeye production limits. 3.1.1 Fish Propagation Facilities Plan Per SA 101, PSE is implementing the Fish Propagation Facilities Plan (FPFP) which 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. Sockeye Spawning Beach 4. A Baker Fish Hatchery Renovation Final Project Completion Report 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 facility is operating. Section 3.1.2 contains an update. Sulphur Springs fish culture facility. The Baker Fish Hatchery Renovation Final Project Completion Report listed above covers the Sulphur Springs facility. The facility is operating. Section 3.1.2 contains an update. 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. 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. The study approach document is attached to this report (see section 5.0, Supporting Documents ). 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. Spawning Beaches 1 3 (Channel Creek site). A decommissioning plan, documentation confirming U.S. Forest Service approval of the decommissioning plan, and interim progress updates will be provided 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), with project construction to begin on July 16, 2013 in accordance to plans. Section 3.1.4 includes an update. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 3

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 are continuing to work on a draft annual plan and progress updates have been provided at ARG meetings. Sufficient production planning information in lieu of a plan document was provided throughout the reporting period to successfully implement the fish production programs. The Fish Co-Managers provided a plan to PSE to distribute 2,750 adult sockeye from the 2012 return to the artificial incubation program in the new fish culture facilities, to distribute 3,400 adult sockeye from the 2012 return to Sockeye Spawning Beach 4, and to achieve a production goal of 6 million fry. The 20,000-pound production program, as determined by the Fish Co-managers, remained unchanged from 2011 (status quo) for sockeye, coho, and rainbow trout production. Allocated to this extended rearing program were approximately 130,000 sockeye, 60,000 coho, and 20,000 rainbow trout fry. In a subsequent ARG meeting on March 12, 2013, the WDFW informed PSE of fry ponding and planting plans for the resulting production of sockeye, directing 4 million fry into Baker Lake and 2 million into Lake Shannon. Section 3.1.3 presents the results of the fish propagation programs, and section 4.2 describes expenditures during the reporting period. 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 discretion of the Fish Co-managers. The process to disburse funds will be determined in 2013. Funding is scheduled for license years 5 50. Funding activity during the reporting period is reported in section 4.1. 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 easier user access and navigation to facility layout, descriptions and drawings, emergency, physical and biological operations, security and maintenance procedures, and makes future updates readily available. 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. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 4

Updates on fisheries enhancement studies approved by the Fish Co-managers to optimize program success. These will be provided annually following completion of the Baker fish hatchery renovation. A schedule will be determined in consultation with the ARG. Fish propagation facilities operations audit. This will be included with the annual fish propagation facilities and programs report based on a June 1 to May 31 operating year. The audit will address 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 incidents. 3.1.2 SA 101 A & B Sockeye Spawning Beach 4 and Sulphur Springs Fish Culture Facility Final Completion Report, Baker Fish Hatchery Renovation 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 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 3 rd operating 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. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 5

Figure 2. Baker fish hatchery constructed 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 the reporting period. The information and results also represent an audit of the existing propagation and enhancement program. The audit describes results of biological, operational, and maintenance efforts related to implementing fish propagation and enhancement facilities and programs, and report whether the program goals were met based on the biologicallyestablished June 1, 2012 to May 31, 2013 operating year. This calendar coincides with the operational cycle for the Baker Project fish propagation facilities, which starts with the first yearly adult sockeye returns to the Baker Project and ends with the completion of Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 6

fry emigration from the sockeye spawning beaches. 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: Sockeye and coho fry production numbers. A discussion of disease management and results. Remedial responses to a landslide at the water supply headworks. 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 the reporting period were based on a production goal of 6 million sockeye fry and a juvenile rearing goal of 130,000 sockeye, 60,000 coho and 20,000 rainbow trout. 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 viral disease endemic to sockeye populations. 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 second 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 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 Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 7

beach section. This protocol has been in place for the past 15 years, and is revised annually as more is learned about the disease. During this reporting period, viral sampling of adult fish indicated that IHN virus was present in sockeye that returned to the Baker system in the fall of 2012, 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, and operational procedures for disease management and biosecurity procedures worked to contain and limit infection episodes. Winter/spring (2013) viral sampling of fry produced from both these facilities confirmed that IHN was not present in fry produced from Spawning Beach 4. Surplus adult sockeye salmon may be released into Baker Lake for spawning in the upper Baker River and its tributaries. Spawning Beach 3 has been operated periodically as an unattended production facility until replacement production can be provided from the new fish culture facilities at Sulphur Springs. When operated, Spawning Beach 3 usually requires pumping to supplement the gravity water supply. PSE provides support in the form of equipment and personnel, at the request of the WDFW. The site of Spawning Beaches 1, 2, and 3 will be decommissioned as a requirement of SA 101. Spawning Beach 3 was not operated for fish production during this reporting period. Beach 3 has been used as additional site to release sockeye fry from the hatchery to Baker Lake. 3.1.3.2 Sockeye Adult Returns (2012 season) 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 co-managers. In 2012, the plan called for holding 3,400 adult sockeye in Spawning beach 4 and 2,750 sockeye as brood stock for the artificial incubation (AI) program. A total of 28,408 sockeye returned to the Baker River adult trap during 2012. The return exceeded the Fish Co-Managers 2012 allocation for the fish propagation facilities, so 17,511 sockeye were placed into Baker Lake, while 4,679 were allocated to tribal harvest. A distribution methodology developed by the Fish Co-Managers allocated fish between Spawning Beach 4, the artificial incubation program, lake release, and tribal harvest based on representative portions of the expected run timing. Beach 4 was seeded with a total of 3,407 fish. Artificial incubation raceways were seeded with a total of 2,752 fish. Combined, the facilities were seeded with a total of 6,159 fish. Beach 3 was not seeded with fish. The loading plan and actual loading count are reported in table 1. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 8

Figure 4. Spawning Beach 4. The beach was loaded with 3,407 adult sockeye in 2012, and is capable of holding over 3,400. Figure 5. The hatchery holding facilities contained 2,750 adult sockeye in 2012, and are capable of holding up to 6,000 broodstock. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 9

Table 1. Fish Co-Managers preseason sockeye beach loading plan and actual beach loading, 2012. Number of Adults Location/Program Loading Plan based on Pre-season Forecast Actual Loading based on Available Returns Spawning Beach 4, Section A 850 852 Spawning Beach 4, Section B 850 852 Spawning Beach 4, Section C 850 852 Spawning Beach 4, Section D 850 851 Artificial Incubation Program, Raceway 1 687 688 Artificial Incubation Program, Raceway 2 687 687 Artificial Incubation Program, Raceway 3 687 687 Artificial Incubation Program, Raceway 4 689 690 Total 6150 6,159 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 (3,278) for the spawning beaches and total stocking density compared to PSE hauling records (table 2). PSE records indicate that 3,407 sockeye were delivered to the spawning beaches. The total difference between the WDFW and PSE carcass counts (including non-spawned females) for Beach 4 is -129 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. 1,417 female and 1,606 male carcasses were counted. An additional 255 unspawned females were counted, bringing the total carcass count at Beach 4 to 3,278. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 10

Table 2. 2012 sockeye salmon beach loading records by data source (WDFW, PSE) and difference. WDFW Carcass Count Record PSE Hauling Count Difference (WDFW-PSE)* Beach 4A Females 326 Females n/a Males 418 Males n/a Unspawned Females 81 Unspawned Females n/a Total 825 Total 852-27 Beach 4B Females 328 Females n/a Males 439 Males n/a Unspawned Females 23 Unspawned Females n/a Total 790 Total 852-62 Beach 4C Females 403 Females n/a Males 371 Males n/a Unspawned Females 60 Unspawned Females n/a Total 834 Total 852-18 Beach 4D Females 360 Females n/a Males 378 Males n/a Unspawned Females 91 Unspawned Females n/a Total 829 Total 851-22 Combined Beach 4 Females 1,417 Females n/a Males 1,606 Males n/a Unspawned Females 255 Unspawned Females n/a Total 3,278 Total 3,407-129 Sum of Beach 4 3,278 Sum of Beach 4 3,407-129 * 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 transitioned into the newly-constructed fish culture facilities that will enable the sequential development of additional population enhancement for sockeye up to the capacity for 7 million fry annually, and which provide added protection in the event of losses from infectious hematopoietic necrosis (IHN). The combined 2012 production goal for the spawning beach and the artificial incubation facility was 6 million fry, including 130,000 fry reserved for a delayed-release experiment in the hatchery. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 11

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, projected by table 3, 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. Table 3. One approach for sequential sockeye development at production facilities at Sulphur Springs, 2012 to 2016. Brood Year Spawning Beach 4 AI Program Total Fry Production 2012 2,000,000+ 4,000,000 6,000,000 2013 2,000,000+ 5,000,000 7,000,000 2014 3,000,000+ 5,000,000 8,000,000 2015 3,000,000+ 6,000,000 9,000,000 2016 3,000,000+ 7,000,000 10,000,000 3.1.3.4 Sockeye Egg Production 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 4,251,000 eggs were deposited into the spawning beach gravels. Artificial incubation (AI). According to WDFW records, from 1,298 spawned females, the AI program yielded a total of 3,375,845 eyed-eggs which had developed on vertical stack egg incubation trays supplied by the hatchery. Inclining the egg incubation trays at 5% was a slight operational adjustment this past year to benefit egg survival. 3.1.3.5 Sockeye Fry Production Spawning Beach 4. According to WDFW records, the spawning beach program produced approximately 2,100,202 fry between February and May for the 2012 brood year (table 4). These fry after emerging from the beach gravel emigrate to a collection hopper and are transported as unfed fry. Artificial Incubation. According to WDFW records, the AI program produced approximately 3,262,645 fry between February and May of which 131,669 were reserved for a delayed-release experiment in the hatchery and the remaining for near immediate release, satisfying the fry production objectives established for 2012 by the Fish Comanagers for the artificial incubation program (table 4).In 2012, AI-program-produced fry were held and fed for up to 10 days. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 12

Table 4. Salmon production from Baker fish propagation facilities, June 1, 2012 to May 31, 2013. Production Year Feb. - May 2013 2012 sockeye Brood Year Species Program Stock Number Artificial Incubation Release Size Baker 3,262,645 a fed fry Release Site Baker Lake, Lake Shannon Feb. - May 2013 2012 sockeye Spawning Beach Baker 2,100,202 b unfed fry Baker Lake Feb. - May 2013 2012 sockeye Extended Rearing Baker 117,990 c fed fry (see table 6) Feb. - May 2013 2012 coho Extended Rearing Baker 93,406 d fed fry (see table 6) a Approximately 1,756,676 were released in Baker Lake, 1,329,520 were released in Lake Shannon. b All were counted into Baker Lake, during end of season annual shutdown a residual amount of remaining fry estimated at 20,000 were released into Lake Shannon. c Approximately 117,990 are held in the extended rearing program and will be released in November 2013 (table 7). d Approximately 132,220 were released in Lake Shannon (table 5), approximately 93,406 are held in the extended rearing program and will be released in May 2014 (table 7). 3.1.3.6 Sockeye Fry Disposition Spawning Beach 4. The Fish Co-Managers determine the allocation percentages of fry to Lake Shannon and Baker Lake. According to WDFW records, most (99%) of the unfed Spawning Beach 4 fry (2,080,202) were released into Baker Lake. The other 1% that went into Lake Shannon consisted of approximately 20,000 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, 1,756,676 (55%) fed fry from the artificial incubation program were released into Baker Lake, and 1,329,520 (41%) fed fry from the artificial incubation program were released into Lake Shannon. Artificial incubation fry were transported to swim-up troughs and fed for a minimum of one week before release into Baker Lake and Lake Shannon,. The intent of this action was to allow the fry to swim up and become active before release, to develop foraging behavior to increase survival, and to postpone release until zooplankton populations were more likely to be available in Baker Lake. Of these, 131,669 fed fry (4%) from the artificial incubation program are being reared for use in future studies and for continuing fish propagation and enhancement programs as of May 31, 2013 (the goal continues to be 130,000). Also, from the previous 2011 brood year production reserved for the delayed-release experiment in the hatchery were 147,653 juvenile sockeye released as sub-yearlings: 140,444 ad-clipped fish at 55 fish per pound (fpp) released into Baker Lake in November of 2012, and an additional 7,209 ad-clipped fish at 31 fpp released into the Baker River from the Lower Baker Stress Relief Ponds in March 2013 (table 6). All fish were raised to appropriate release sizes and released on schedule. Sockeye fry production was only slightly affected by infectious hematopoietic necrosis (IHN), a virulent rhabdoviral disease that occurs in the wild and can typically cause high mortality in juvenile sockeye. During this reporting period, viral sampling indicated that Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 13

IHN virus was carried in adult sockeye that returned to the Baker system fall 2012, 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 (2013) viral sampling confirmed that no IHN was present in fry produced from Spawning Beach 4. IHN infection was confirmed to a single episode in the artificial incubation program fry: the last remaining egg-take of the season (number 9, 44,767 sockeye fry) was euthanized on May 13, 2013. IHN infection was confirmed in juvenile sockeye. Of 12,118 sub-yearling sockeye transferred to the Lower Baker stress relief pond, 4,909 died from IHN after they were transported, leaving 7,209 for release to the Baker River on March 14, 2013 at 31 fpp. These sockeye were not euthanized like the others because the Fish Co-managers concluded that the IHN virus had run its course and the remainder should survive. 3.1.3.7 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 6 shows the trend of fry releases from spawning beaches and hatchery production. Levels have increased significantly since the new Baker Hatchery began operation. Table 5 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 the 2012 reporting period, the total yearly sockeye fry propagation from the Baker Hatchery was 5,362,847, making 2012 the 4 th consecutive year in which fry production exceeded 5 million and was a two-fold increase from historical levels. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 14

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 2011. Spawning beach spawned females Counted fry out of spawning beach #4 Estimated fry from 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 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 Smolts from Lake Shannon a 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 1415 2,100,202 0 1298 3,375,845 3,262,645 3,836,878 1,349,520 a Counts include all sockeye outmigrants but do not reflect smolt production by brood year because the majority of smolts outmigrate at age 1. 6,000,000 Resulting Fry Production New Baker Hatchery 5,000,000 4,000,000 Number of Fry 3,000,000 Spawning Beach 4 Pilot Hatchery (AI) 2,000,000 1,000,000 0 Beach 1 1957 1959 1961 1963 1965 1967 Spawning Beach 2 1969 1971 1973 1975 1977 1979 1981 Spawning Beach 3 1983 1985 1987 Brood Year Figure 6. Yearly number of sockeye fry released into the reservoirs from Baker fish propagation programs, 1957-2013. 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 15

3.1.3.8 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. From the 2012 fry production, 116,536 surplus coho fry (190 fpp) were released into Lake Shannon at Sulphur Creek in May 2012. Approximately 60,000 fry were allocated for extended rearing and release as smolts in the spring of 2013 to continue migration experiments and contribute to adult returns. These fry, reared in raceways at Upper Baker, resulted in a total of 62,420 yearlings. Of these fish, 6,386 (22 fpp) were released into net pens in Lake Shannon to be used for juvenile passage biological studies. The remaining 56,034 yearling fish (24 fpp) were released below both dams into the Baker River stress relief ponds (SRP) in April 2013 to contribute to future fall adult returns. All fish were raised to appropriate sizes and released on schedule (table 6). Table 6. Salmon releases from Baker River fish propagation facilities, June 1, 2012 to May 31, 2013. Release Date Brood Year Species Stock Number Size (fish/lb.) Pounds Planted Release Site May 30, 2012 2011 coho Baker 116,536 190 614 Sulphur Creek Nov 13, 2012 2011 sockeye Baker 76,301 55 1,380 Baker Lake Nov 15, 2012 2011 sockeye Baker 64,143 55 1,169 Baker Lake March 14, 2013 2011 sockeye Baker 7,209 31 232 SRP April 9, 2013 2012 coho Baker 2,062 21 97 Shannon Pens April 10, 2013 2012 coho Baker 2,101 21 102 Shannon Pens April 10, 2013 2012 coho Baker 2,223 24 93 Shannon Pens April 17, 2013 2011 coho Baker 56,034 24 2,373 SRP May 15, 2013 2012 coho Baker 132,220 462 286 Sulphur Creek Total Releases 458,829 6,346 3.1.3.9 Coho Adult Returns (2012 season) A total of 5,566 coho adults returned to the Baker River trap in 2012, of which 201 were removed from the trap for the supplementation program. These fish were held at the Baker hatchery until sexually mature and then spawned. The coded wire tags were recovered from their carcasses for stock identification. 3.1.3.10 Coho Egg and Fry Production For the 2012 brood year (2013 fry production), 97 Coho females were spawned and an estimated total of 233,822 eyed eggs were incubated at the hatchery. An inventory of fry based on eyed egg weight samples less ponding loss provided a count of 231,870. Approximately 60,000 fry will be allocated to the extended rearing program (the program goal is 60,000), resulting in a surplus of Coho fry. The 132,220 surplus fry of (461 fpp) were released into Lake Shannon at Sulphur Creek in May 15 th 2013. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 16

The estimated 60,000 fry allocated for extended rearing will be released as yearlings (~20 fpp) in the spring of 2014 to continue migration experiments and contribute to adult returns. An additional 6,500 will be used for juvenile passage biological studies. All of these fish reared at the Baker hatchery will be used for the annual mark-recapture (reservoir migration response) experiments. The remaining 53,500 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. Table 7. Salmon rearing inventory at fish propagation facilities as of May 31, 2013. Planned Release Date Brood Year Nov 2013 2012 Sockeye May 2014 2012 Coho Species Program Stock Inventory Extended Rearing Extended Rearing Planned Release (fish/lb.) Baker 117,990 60 Baker 93,406 20 Planned Release Site Baker Lake Baker/ Shannon/ Baker River 3.1.3.11 Rainbow Trout Production WDFW provided 20,000 rainbow trout fingerlings for the program in July 2012. PSE supplied labor, rearing facilities, and food from July to January 16 th. Because of the December 2012 landslide at the hatchery water supply intake, the fish were moved to the SRP ponds on December 6th, held there until January 16 th, and then relocated to Marblemount Hatchery, which supplied labor and rearing facilities until the trout were released. During the reporting period, approximately 8,586 rainbow trout were released into Depression Lake for recreational fishing and 2,400 rainbow trout were released into Grandy Lake as an expansion of this recreational fishing program. 1,000 trout were allocated to the Upper Skagit Indian Tribe for their fishing derby. All fish were raised to appropriate target sizes averaging 3 fpp and released on schedule. Additional releases of the remaining trout into Depression Lake would continue into June 2013. Figure 7 shows the Baker fish hatchery in operation for juvenile fish rearing for the 20,000 pound capacity production program directed by the Fish Co-managers annual fish production goals. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 17

Figure 7. 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. 3.1.3.12 Facilities Operations Monitoring Repairs to Water Supply Monitoring alarms detected a turbidity event on December 5, 2012 in the primary water supply to the Upper Baker fish rearing facilities at Sulphur Springs. 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. The newlyinstalled sand separators are designed to have sediment protection and removal built into the primary water supply to address these events. The event on December 5 th was followed by a more substantial landslide on December 10 th, which resulted in large amounts of sediments infiltrating the water supply and overwhelming the sand separators. PSE mobilized quickly to respond to the December 2012 landslide and temporarily restored water supply by removing rip rap (large boulders), cleaning and removing the sediment buildup, and replacing the riprap back into the spring channel while monitoring for turbidity (figure 8). Juvenile fish in the hatchery (155,000 sockeye, 60,000 coho and 20,000 rainbow trout) were relocated to offsite locations, including the stress relief ponds at Lower Baker. Only a few adult sockeye broodstock remained and were spawned, and adult coho broodstock were connected to the backup water system. Incubating sockeye and coho eggs already on the domestic water supply remained on the back-up water supply system. PSE began planning for permanent repairs to begin in June 2013 during the normal annual hatchery maintenance shutdown in preparation for the next brood cycle, so that it Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 18

would have the least effect to fish. June is also part of the drier season, making new landslides unlikely during the repairs. Making these repairs to the hatchery headworks required PSE to review conditions, consult with the USDA-FS and the ARG, and then plan and initiate repairs following USDA-FS approval of planned work. PSE designed a repair method employing a graded filter and geotextile filter fabric at the Sulphur Springs water supply intake to control further sediment infusion. The filter materials were selected to cap the hatchery water intake area, protecting it from sliding materials in the event of a new landslide. The repair method was approved by the USDA-FS on May 28, 2013 (USDA-FS, 2013a) and PSE immediately initiated construction work based on the approved design (PSE, 2013a). Figure 8. December 2012 landslide debris, debris removal, and riprap cleaning and replacement. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 19

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. Actual decommissioning of the Channel Creek site will occur after the USDA-FS (the land owner) authorizes decommissioning. PSE consulted with the USDA-FS towards an understanding of the decommissioning procedures. PSE and the USDA-FS sought input from the ARG and the Cultural Resources Advisory Group (CRAG) at meetings. The consultation process resulted in a USDA-FS scope-of-work document (June 9, 2011), an agreement on a general approach that considered the input of the ARG and CRAG, and the development of conceptual design options presented to the ARG in June 2012, followed by the ARG s selection of restoration Alternative 5, in July 2012. The following restoration goals for the decommissioning of the site were determined during a workshop with PSE, and the ARG, held on June 26, 2012 (PSE, 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. The following site decommissioning goals were identified by the USDA-FS. 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. Alternative 5, which meets these goals, includes 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. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 20

PSE provided an alternatives assessment report to the ARG in August 2012 as documentation for moving forward with the Alternative 5 design. PSE developed a Channel Creek Site Decommissioning Plan that outlines the progress that PSE has made in planning for decommissioning and the procedures for decommissioning based on the Alternative 5 design. Following ARG review, PSE provided the ARG with an updated plan including ARG comments and PSE responses (December 2012). PSE finalized the design with a plan set dated April 18, 2013 (Anchor QEA, 2013). PSE received documentation ( Notice to Proceed ) confirming that the USDA-FS had completed its review and approved the decommissioning (USDA-FS, 2013), with construction to begin on July 16, 2013. Construction is expected to be complete by the end of 2013. Figure 9. Aerial view of the site of Spawning Beach 1, 2, and 3. Doc ID: BAK.2013.1219.0615.PSE.FERC-DC Baker River Hydroelectric Project Page 21

Fish Propagation 2012 Annual Report Figure 10. Existing conditions at Spawning Beaches 1, 2, and 3. (PSE, 2013) BAK SA 101 Annual Report 2012.Doc Doc ID: BAK.2013.1219.0615.PSE.FERC-DC PUGET SOUND ENERGY Baker River Hydroelectric Project 19 December 2013 Page 22