PROGRAMMATIC AGREEMENT AND HISTORIC PROPERTIES MANAGEMENT PLAN 2015 ANNUAL REPORT

SETTLEMENT AGREEMENT ARTICLE 201 PROGRAMMATIC AGREEMENT AND HISTORIC PROPERTIES MANAGEMENT PLAN 2015 ANNUAL REPORT REPORTING PERIOD JANUARY 1 DECEMBER 31, 2015 BAKER RIVER HYDROELECTRIC PROJECT FERC No. 2150 June 2016 BAK SA 201 Annual Report 2015.Docx Baker River Hydroelectric Project PUGET SOUND ENERGY 23 June 2016

CONTENTS CONTENTS 1.0 Executive Summary... 1 2.0 Introduction... 2 3.0 Activity Report... 3 3.1 Principal Management Activities... 3 3.2 Monitoring Results and Maintenance Plan... 7 4.0 Accounting... 8 4.1 Funding and Expenditures Prescribed by SA 201... 8 4.2 Additional PSE Expenditures for SA 201... 8 4.3 Adjustments... 8 5.0 Supporting Documents... 8 6.0 Review and Comments... 9 7.0 References... 9 PUGET SOUND ENERGY Baker River Hydroelectric Project Page ii

1.0 Executive Summary This annual report reviews PSE activity undertaken in 2015 to implement settlement agreement article 201 (SA 201), Programmatic Agreement, and license article 404 (LA 404), Programmatic Agreement and Historic Properties Management Plan, of the Baker River Hydroelectric Project license. SA 201 implementation measures completed during the reporting period included: Consultation with the Cultural Resources Advisory Group (CRAG) regarding implementation of the Historic Properties Management Plan (HPMP) for the Baker River Hydroelectric Project. Providing the CRAG with a proposal to combine the Lower Baker Dam crest and compound projects into one memorandum of agreement (MOA) to address adverse effects to contributing resources in both the Baker River Hydroelectric Development Historic District and the Washington Portland Cement Company Historic District. The combined MOA would stipulate mitigation for all the actions associated with the projects. Providing the CRAG with updates and new schedules for the Lower Baker Dam crest and floodwall projects. Providing the CRAG with background information on Cottage 2 (HPMP 17) and developing treatment options for the house. Following these discussions and review by a Historic Architect, PSE provided the CRAG with a preferred treatment plan for Cottage 2. Providing the CRAG with the final report on the results of the Washington Portland Cement Company remote sensing and archaeological investigations within the Lower Baker compound area. Providing the CRAG with the final cut of the Baker River videos. PSE shared these videos publically on their YouTube website area. Providing the CRAG with background information on recently acquired habitat lands at Burpee Hill South. This included a vicinity map of the area and project boundaries that were incorporated into the License. Road improvements for the property area were also discussed. Providing the CRAG with the results of archaeological monitoring investigations for the Swift Creek Campground shoreline erosion control project. Providing the CRAG with the 2014 annual monitoring report for archaeological resources in accordance with appendix G (treatment plan) of the HPMP Providing the CRAG with the draft Programmatic Agreement and HPMP 2014 Annual Report. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 1

Introduction 2.0 Introduction On October 17, 2008, PSE received a 50-year license for the Baker River Hydroelectric Project (FERC No. 2150) ordering implementation of the Programmatic Agreement (PA) and Historic Properties Management Plan for the project under license article 404 (LA 404) and incorporating a comprehensive settlement agreement s proposed measures. Under section 106 of the National Historic Preservation Act (NHPA) and related regulations, federal agencies must take into account the effect of any proposed undertaking on properties listed or eligible for listing in the National Register of Historic Places (defined as historic properties) and afford the Advisory Council on Historic Preservation a reasonable opportunity to comment on the undertaking. This generally requires the FERC to consult with the State Historic Preservation Officer (SHPO) to determine whether and how a proposed action may affect historic properties, and to seek ways to avoid or minimize any adverse effects. To satisfy these responsibilities, the FERC executed the PA with the Washington Department of Archaeology and Historic Preservation (DAHP) on September 21, 2006, and invited PSE, the U.S. Department of Agriculture Forest Service, the U.S. Army Corps of Engineers, the National Park Service, the Sauk-Suiattle Indian Tribe, the Upper Skagit Indian Tribe, and the Swinomish Indian Tribal Community to concur with the stipulations of the PA. The PA is consistent with article 201 of the settlement agreement (SA 201) because it requires PSE to prepare and implement a final Historic Properties Management Plan (HPMP) for the term of any new license issued for this project. Execution and implementation of the PA demonstrates the FERC s compliance with section 106 of the NHPA. License article 404 requires PSE to implement the PA, and to file a final HPMP for FERC approval within one year of license issuance (October 17, 2009). Settlement agreement article 601 (SA 601) established the Baker River Coordinating Committee (BRCC) to implement the terms of the settlement agreement. The BRCC established technical resource groups, including the Cultural Resources Advisory Group (CRAG) to address ongoing historic property issues as PSE carries out the terms and conditions of the license. The Reporting and Auditing paragraph within SA 601 directs PSE to provide an annual report to the BRCC and the FERC, generally summarizing the activities of the CRAG during the preceding year as required by SA 201. During 2010, PSE and the CRAG refined the draft HPMP. PSE submitted the final HPMP for FERC approval on September 25, 2010. The final HPMP was approved by the FERC on March 1, 2011. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 2

Activity Report 3.0 Activity Report 3.1 Principal Management Activities Quarterly Consultation with the CRAG Consultation topics included: Reviewing major PSE projects and schedules. Developing strategies for treatment of historic properties. Conducting cultural surveys and inventories. Reviewing and commenting on cultural resource findings and recommendations. Reviewing and finalizing meeting notes. Meetings with the CRAG A summary of these consultations is as follows. February 18, 2015, Skagit Service Center, Burlington, WA. Reviewed BRCC activities, reviewed major project activities, reviewed list of annual projects for 2015. May 13, 2015, Skagit Service Center, Burlington, WA. Reviewed BRCC activities, reviewed major project activities, and provided progress updates on the Lower Baker crest and compound improvement project. Provided updates on treatment options for Cottage 2. Provided updates on the completion schedule for Baker video shorts. Reviewed habitat land acquisition. August 19, 2015, Skagit Service Center, Burlington, WA. Reviewed BRCC activities, reviewed major project activities, and provided progress updates on the Lower Baker crest and compound improvement project. Previewed the final version of the Baker video shorts produced as part of the mitigation for impacts to the Lower Baker Dam, and received approval for sharing with the public. Reviewed the vicinity map for the recent habitat land addition, Burpee Hill South. The December 2, 2015 meeting was cancelled due to most members' inability to attend. Programmatic Agreement Activities As plans for implementing the license continue to develop, PSE consulted with the CRAG concerning the effect of potential project activities on the project s historic properties. Consultation, review, and implementation for 2015 projects included the following. Baker River MOA (LA 404, SA 201) Lower Baker dam crest and floodwall improvements LB Dam Crest project Cottage treatment proposal Washington Portland Cement Company archaeological investigation Monitoring report for Swift Creek erosion control project (SA 110) Baker River short videos PUGET SOUND ENERGY Baker River Hydroelectric Project Page 3

Activity Report Burpee Hill South property acquisition Annual draft review of cultural report (LA 404, SA 201) Maintenance plan (LA 404, SA 201; appendix F of HPMP; see section 3.2) Routine actions (LA 404, SA 201; appendix C of HPMP; see section 3.2) Lower Baker Dam Crest and Compound Project MOA In 2015, in consultation with the CRAG, PSE combined both the Lower Baker compound and Lower Baker Dam crest projects into one MOA to mitigate their adverse effects to contributing resources in both the Baker River Hydroelectric Development Historic District and the Washington Portland Cement Company Historic District. The combined MOA would stipulate mitigation of all the actions associated with the projects. In February 18, 2015 meeting, PSE updated the CRAG regarding the schedule and budget for the Lower Baker compound and Lower Baker crest projects. PSE reported that the altered schedules for both projects meant completing one MOA to capture the mitigation of adverse effects that would result from both projects. PSE proposed that one MOA be completed, and the CRAG felt this was a reasonable request. A new area of potential effects (APE) was discussed and proposed. PSE forwarded a cleaned-up version of the draft MOA in March 2015 for the CRAG to review. The draft was discussed in the May 13, 2016 meeting, and no significant comments were received. No further activities with this project occurred in 2014. Lower Baker Dam Crest and Floodwall Improvement The CRAG was given an update on the proposal to redevelop the Lower Baker Dam crest and floodwall. Project managers explained that three projects were necessary to meet the requirements under the FERC s Part 12 dam safety standards for the Lower Baker Dam crest improvement project. The three smaller components of the Project were all interrelated: grouting, flood wall construction (the MOA covers the related abutment project), and dam crest improvements. The CRAG received presentations and updates at all 2015 CRAG meetings, and was given a chance to comment and ask questions. The general schedule to complete work on the three phases was related to the CRAG: 2016 Grouting 2017 Flood wall project (raising walls on the abutment) 2018-19 Dam crest work In addition, an architectural historian assisted PSE in the review and provide input on the design of the projects. No further activities with this project occurred in 2015. Cottage Treatment Proposal The CRAG was given an update on recent inspections and findings at the three remaining cottages at the Baker River Hydroelectric Project. All three cottages are contributing resources to the Baker River Hydroelectric Development Historic District. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 4

Activity Report The inspection report and historic background information were presented to the CRAG. The following Historic Properties Inventory form information was summarized. Baker HPMP 17 (Cottage 2) was found to be a contributing resource to the historic district, but not eligible under criterion C due to the many renovations and alterations over the years. HPMP 15 (Cottage 5) was found to be a contributing resource to the historic district, and eligible under criterion C due to the lack of renovations and alterations. HPMP 16 (Cottage 6) was found to be a contributing resource to the historic district, and eligible under criterion C due to the lack of renovations and alterations. Having reviewed the findings of the report, PSE recommended that HPMP 15 (Cottage 5) and HPMP 16 (Cottage 6) be maintained according to preservation guidelines outlined in the HPMP and Maintenance Guidelines. Due to the poor condition of HPMP 17 (Cottage 2) and the cost to bring it up to a preservation level, PSE recommended that Cottage 2 be demolished or removed. The CRAG asked PSE to hire an independent third-party historic architect to make a recommendation for treatment of Cottage 2. PSE hired a historic architect to look at the cottage and make recommendations based on the inspection report, their assessment of its condition, the historic record, and any other pertinent information available. The historic architect completed a field inspection and provided PSE a report with their recommendation. PSE shared this report with the CRAG at their August 19, 2016 meeting. The CRAG asked PSE to review and consider the various treatment options prepared by the historic architect for Cottage 2 and make a recommendation in advance of the December 2, 2015 meeting. Based on further review of treatment options provided, PSE recommended Option 3, salvage and removal of the building from the site, either in pieces or in its entirety. A letter outlining this recommendation was sent to the CRAG for review and comment on October 28, 2015 (Attachment 1). PSE received one comment from the Upper Skagit Indian Tribe stating that they had no preference regarding the treatment option for Cottage 2 (see attachment 1). Based on PSE s recommendation, the PSE Cultural Resource coordinator determined that this recommendation would result in an adverse effect to historic properties (condition D, "Finding of Adverse Effect on Historic Properties, Identification of Historic Properties," section 5.3.1, Baker River Historic Properties Management Plan [HPMP], September 17, 2010). As per the provisions of the HPMP, the CRAG had 30 days from receipt of the letter to make any objections regarding the identification efforts or the finding of an adverse effect. No objections were received from any members of the CRAG. Based on this, PSE recommended that Cottage 2 be added to the existing Lower Baker Dam crest and compound MOA, and that the stipulation to complete DAHP Level II documentation incorporate a section on company towns. The CRAG agreed, and asked to review the revised MOA. No further activities with this project occurred in 2015. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 5

Activity Report Washington Portland Cement Company (WPCC) Archaeological Investigations The PSE cultural resources coordinator forwarded to the CRAG the results of an archaeological investigation in the Washington Portland Cement Company Historic District at our Lower Baker compound on April 20, 2015, and a finalized report on December 8, 2015. The archaeological investigation combined gradiometry, a remote sensing technique, with mechanical excavation. The investigation identified four archaeological sites associated with WPCC activities, and PSE recommended that three of the sites be recommended eligible for listing in the National Register of Historic Places (NRHP) under criteria A and D as contributing resources to the Washington Portland Cement Company Historic District. The results of the investigation are summarized in the attached report. No further activities on this project occurred in 2015 (see attachment 2). Swift Creek Erosion Control Monitoring PSE recommended archaeological monitoring of construction associated with the Swift Creek Erosion Control project that was reviewed and concurred with by the CRAG in 2013 and 2014. The archaeological monitoring would be within the Swift Creek valley bottom to determine whether or not all project activities would be in lahar sediments. PSE forwarded a cover letter and the results of the archaeological monitoring on March 24, 2015. No cultural materials were observed in the test pits or on the ground surface in other portions of the APE that were inspected during archaeological monitoring. No comments were received from any CRAG members. No further activities with this project occurred in 2015 (see attachment 3). Historical Videos In accordance with the FERC-approved MOA (April 10, 2013), PSE worked with the CRAG and the production company Sadis Filmworks to develop three short videos outlining the history of fish conservation and dam construction at the Lower Baker Development. Rough-cut versions of the videos were sent to the CRAG for review, and the rough cuts were screened at the August 20, 2014 CRAG meeting. Comments received were incorporated, and fine-cut versions of the videos were made available to the CRAG for review in December 2014. Comments favoring additional interviews were received from the Upper Skagit Tribe in early 2015, and these interviews were completed. Revisions to the video shorts were made, and the CRAG reviewed these in May 2015. No comments were received, and the video shorts were finalized and viewed in the August 6, 2015 CRAG meeting. The final versions were made available to the CRAG and the public, fulfilling this stipulation of the MOA. No further activities with this project occurred in 2015 (see attachment 4). Burpee Hill South Property Acquisition PSE provided the CRAG with background information on the recently acquired habitat land called Burpee Hill South. PSE provided a vicinity map of the newly acquired property. PSE also presented a map of existing and proposed road improvements at the property. PSE stated that a cultural resources inventory would be conducted prior to PUGET SOUND ENERGY Baker River Hydroelectric Project Page 6

Activity Report any road improvements. No further activities with this project occurred in 2015 (see attachment 5). Annual Report Review The PSE cultural resources coordinator forwarded the review draft of the 2014 annual report for settlement agreement article 201, Programmatic Agreement and Implementation of the Historic Properties Management Plan, to members of the CRAG for a 30-day review period on March 31, 2015. PSE received one response from the DAHP, stating their acknowledgement of PSE s continuing efforts to implement measures under the PA and HPMP. No further activities for this project occurred in 2015 (attachment 6). No other project modifications required implementation of HPMP measures. 3.2 Monitoring Results and Maintenance Plan Monitoring Results In accordance with the annual monitoring protocol established in the HPMP, resource conditions at several archaeological sites within the Baker River Hydroelectric Project were monitored in 2015. As outlined in the Archaeological Resources Treatment Plan (HPMP appendix G), site visits were attempted to all pre-contact sites that are contributing elements to the Baker River Archaeological District (DT189), as well as the National-Register-eligible Weston and Edgar Homesteads on Lake Shannon. Proposed treatment for pre-contact sites included the systematic collection of all surface artifacts as well as completion of a Baker River Hydroelectric Project Archaeological District archaeological resources condition report (ARCR) for each site. Systematic surface collection included closely-spaced pedestrian surveys within and around the site to locate all visible artifacts. Each artifact was flagged and assigned a field inventory number, its location was recorded with a hand-held Trimble GPS unit, and the object was placed in an artifact bag with its corresponding field number. Photos were taken at each site, and conditions were documented on standard daily work records. An ARCR was completed for each site including a collected artifact catalog or field artifact inventory where appropriate. A Washington State archaeological site update form was prepared for sites with notable change in conditions or contents. Due to higher-thanexpected reservoir elevations throughout the year, archaeological sites 45WH636 and WH45753 were visited in 2015. The report Summary of 2015 Archaeological Monitoring and Conditions Assessment for Selected Pre-Contact Sites on Baker Lake, Whatcom County, Washington and all associated Archaeological Resources Condition Reports (ARCR) were sent to the CRAG for review on March 9, 2016. The comment period has not ended at the time of this report, but no comments have been received to date (see attachment 7). Maintenance Plan In accordance with section 5.3.1 of the HPMP ( Actions Excluded from Case by Case Review ) and appendix F of the HPMP ( Maintenance Guidelines ), the PSE cultural resources coordinator reviewed tenant agreements for historic houses currently occupied PUGET SOUND ENERGY Baker River Hydroelectric Project Page 7

Accounting at the Baker River Project. An inspection of the three cottages was completed, but none of the maintenance work identified was conducted in 2015. This work is planned for 2016. No further related activities for this project occurred in 2015. Routine Actions The PSE cultural resources coordinator reviewed routine actions as outlined in appendix C of the HPMP, and determined that no proposed action fell under these conditions. No further activities relating to this action occurred in 2015. 4.0 Accounting Puget Sound Energy, pursuant to settlement agreement articles 102, 201, 301, 501, and 602, is required to provide an annual summary of expenditures made during the preceding year, as well as an accounting of funding expenditures, any interest earned, disbursements made as required by any article, and adjustments for inflation. This section provides an accounting of all expenditures made during the reporting period. All disbursement adjustments and relevant calculations were determined using the guidelines provided in settlement agreement article 602. Annual expenditures of adaptive management funds under SA 602 are summarized in the SA 602 annual report. This report is filed with the FERC by December 31st of each year. The Cultural Resource Enhancement Fund specified by SA 602 for the adaptive management of cultural resources will be funded beginning in 2018. 4.1 Funding and Expenditures Prescribed by SA 201 No funding was prescribed for SA 201 implementation during the reporting period. 4.2 Additional PSE Expenditures for SA 201 During the reporting period, PSE spent approximately $82,519 for operations and maintenance (O&M) expenditures for SA 201 implementation. 4.3 Adjustments There were no adjustments to the funding for SA 201 during the reporting period. 5.0 Supporting Documents The following documents are attached to this report as separate files. E-mail to CRAG Re: Baker River Hydroelectric Project, Recommendation on Cottage 2 treatment; letter report included (attachment 1) Response e-mail from Upper Skagit Indian Tribe Re: Baker River Hydroelectric Project, Recommendation on Cottage 2 treatment (attachment 1) E-mail to CRAG Re: Archaeological Investigation for Washington Portland Cement Company Historic District, report included (privileged) (attachment 2) E-mail to CRAG Re: Swift Creek Monitoring cover letter to CRAG, report included (privileged) (attachment 3) PUGET SOUND ENERGY Baker River Hydroelectric Project Page 8

Review and Comments E-mail to CRAG Re Finalization of historical video shorts and availability via YouTube or DVD, links included (attachment 4) Burpee Hill South maps shared with CRAG in quarterly meeting (attachment 5) E-mail to CRAG Re 2014 Annual report for Settlement Article 201, Programmatic Agreement and Implementation of the Historic Properties Management Plan, report included (attachment 6) E-mail response from DAHP Re Annual report for Settlement Article 201, Programmatic Agreement and Implementation of the Historic Properties Management Plan, letter included (attachment 6) E-mail to CRAG Re 2015 Annual Archaeological Monitoring report, report included (privileged) (attachment 7) 6.0 Review and Comments PSE delivered a review draft of this report to the Cultural Resources Advisory Group by e-mail on March 31, 2016, for a 30-day review and comment period. No reviewers replied with comments. 7.0 References Parvey, Michele. 2015. Summary of 2015 Archaeological Monitoring and Conditions Assessment for Selected Sites on Lake Shannon and Baker Lake, Skagit and Whatcom Counties, WA. Prepared for Puget Sound Energy by Southwest Environmental Consultants Inc., Council, Idaho. Puget Sound Energy. 2010. Historic Properties Management Plan (FERC No. 2150). Puget Sound Energy, Bellevue, WA. PUGET SOUND ENERGY Baker River Hydroelectric Project Page 9