SUMMARY
The Fundación Río Napo (FRN) is a non-profit river conservation organization which is legally incorporated and based in Ecuador. The FRN is not opposed to hydro development in general, and actively participates with government agencies and developers to encourage responsible planning, decision-making and best management practices. 

The FRN does not recommend CDM validation for the Toachi-Pilatón Hydroelectric Project in Ecuador due to gross deficiencies for meeting additionality requirements, since the project has been planned to be incorporated into the energy matrix in Ecuador for many years, and has already secured 100% of its funding, and formally started construction in 2008. The FRN also points out important deficiencies in the stakeholder participation process, as well as general social and environmental management considerations for the project. 

For these reasons, we feel that the Toachi-Pilatón Hydroelectric should not receive CDM status or receive Certified Emission Reduction credits. 

STAKEHOLDER PARTICIPATION AND ENVIRONMENTAL MANAGEMENT
The Fundación Río Napo (FRN) attempted to participate and contribute towards the responsible development of the Toachi-Pilatón Hydroelectric Project since the first public participation process that was carried out by the current state-owned company and project developer Hidrotoapi E.P. on September 19, 2007 in Alluriquin, Ecuador. 

Our main interest has been related to promoting an integrated watershed management planning perspective and environmental monitoring program to address land and water use issues in the Toachi, Sarapullo and Pilatón river basins, and their influence to the greater Blanco River watershed system.  

The FRN has serious concerns regarding the determination of the installed capacity for the project based on available flow statistics, the consideration of the alternative designs for the diversion dam structure on the Pilatón River, as well as environmental instream flows and recreational use of the Pilatón, Sarapullo and Toachi Rivers that will be primarily affected by the implementation of the Toachi-Pilatón Hydroelectric Project. 

Water quality in both the Toachi and Pilatón Rivers has deteriorated significantly in the last 10 years due to unprecedented growth and development in the headwaters; this has been a notable impediment to the historical and existing recreational use of these rivers, and the FRN has made important recommendations for the Toachi-Pilatón Hydroelectric Project to contribute towards the implementation of waste management and sewage treatment systems for the main population centers that influence the project area as part of environmental management programs and targeted financial strategies provided by small percentages of project revenues. 

Due to the strategic location along a main road artery between the capital city of Quito and the major population centers on the Pacific coast, and due to their outstanding resource values and exceptional scenic qualities for landscapes, vegetation and geology, the Toachi, Pilatón and Sarapullo Rivers have proven potential for recreational use and tourism, which could even be enhanced by scheduled releases and flow management, as well as the design considerations of the dam structures. These activities could provide additional social values and economic benefit to communities in the project area, and have only been limited by the notable decline in water quality in these rivers from the lack of sewage treatment and waste management in the population centers in the Toachi and Pilatón River basins. 

The consideration of non-consumptive recreational uses is required as part of the determination of environmental instream flow requirements by Ecuadorian law (Acuerdo Ministerial No. 155, Ministerio del Ambiente, R.O. No. 41- Suplemento, 14 de marzo de 2007 – Libro VI (TULAS) – Anexo 1B). 

Unfortunately, our input has been reduced and minimized in all references and reports, including the PDD, and the comments and concerns submitted by the FRN have not been adequately addressed or considered during the environmental impact assessment, or the final engineering designs for the project, which has been ongoing. 

Despite promises made to the FRN by the state-owned company Hidrotoapi E.P. to include and contact the FRN for an evaluation of recreational uses in the environmental impact assessment and management plan for the project; no contact was ever made, and the environmental impact assessment and management plan, including the environmental instream flow determinations, were approved for the project without any consideration of existing and historic recreational uses of the affected river sections. 

Furthermore, the FRN solicited copies of the environmental impact study and management plan several times to the state-owned company Hidrotoapi E.P., but has yet to receive this information since it was first requested in the year 2008. 

These indications demonstrate and justify the very low confidence that the FRN has in the state-owned Hidrotoapi E.P. developer to comply with social and environmental management programs or considerations. 

ADDITIONALITY
Preliminary studies for the Toachi-Pilatón Hydroelectric Project were developed by the Ecuadorian Institute of Electricity (INECEL) in 1963. Since 1994, the Toachi-Pilatón Hydroelectric Project has been planned for inclusion in the Ecuadorian energy matrix as a strategic renewable energy project by the Ecuadorian government. However, the project has a number of technical deficiencies which have limited interest in its development over the years. 

The project first began construction in April of 2008, but has experienced a number of setbacks and delays. In April 2011, it was announced that the Toachi-Pilatón Hydroelectric Project had secured 100% funding. This was published in English at: 
http://www.bnamericas.com/news/electricpower/toachi-pilaton-hydros-principal-works-to-begin

The fact that the project has met its funding requirement proves that the Toachi-Pilatón Hydroelectric Project is not dependent on receiving CDM status or CERs for its financing or implementation. These benefits should be reserved and designated for renewable energy projects that could truly benefit from these incentives and credits. 

Also, there is some question about the ability of the Toachi-Pilatón Hydroelectric Project to maintain its installed capacity of 253 MW throughout different months of the year. The project was originally proposed as a 190 MW project, then increased to a 228 MW project, and now a 253 MW project. 

However, based on the average annual generation of 1090 GWh/year reported in the PDD, this amounts to an efficiency factor on the order of 0.49, which is quite low, and what would be expected, and what is typically observed, from the existing run-of-river projects in Ecuador which have little or no reservoir capacity, and that have been designed based on median monthly or median annual flow statistics. 

The FRN predicts that the actual observed average annual electrical generation will be somewhat lower than what is proposed in the PDD, and that in order to maintain the effective capacity of 253 MWh (or even 126 MW) available in the national power grid at any given moment, and with the exception of 2-3 months of the year, the deficit in production will nearly always have to be supplemented by thermal generating plants, which will not result in any significant change in the baseline condition for thermal electrical generating dependency in the country. 

Since the project is located on the west slope of the Andes Mountains, it is promoted to have complementary hydrology and subsequent complementary power generation to cover the production deficits due to natural flow variations of the principal existing hydroelectric projects in the Amazon region of the country. For this reason, the Toachi-Pilatón Hydroelectric Project is designed to produce maximum generating capacity from peak flow conditions which historically exist during 3-4 months of the year (February-March-April), but may still be variable and unpredictable on a daily basis, depending on local precipitation patterns. 

Due to the very extreme, dynamic and pronounced seasonal hydrology that is observed in the Andean West-Slope River drainages, during most of the year, the rivers maintain relatively low, minimum flows that may preclude the ability of the project to generate with even 1 turbine at times; however, during the rainy season, which varies in duration, frequency and intensity from year to year, the rivers often flash to high, bank-full levels and flood conditions. These peak stages are typically short-lived events, and are often accompanied by mass wasting, large landslides, and high levels of erosion that can be problematic and limiting to power generation due to the excessive levels of sedimentation. 

All of this reminds us that since the Toachi-Pilatón Hydroelectric Project is a run-of-river project with small diversion dam structures that only allow for minimal to nonexistent regulating capacity due to the inherent seismic risks, geologic instability and sedimentation rates in the Andean Mountain region, the electrical generation will be dependent on the daily flow statistics at the Q90% probability level. 

For this reason, it is important to review the hydrologic studies and flow data that is available for this project which contrasts significantly with the design flows needed to generate the installed capacity. It is also important to take into account that at least some of the flow data for the Toachi River reported and used in the analysis and design for this project may be somewhat misleading and already includes the additional flow input from the Pilatón diversion added to the Toachi River in the project scheme, making the Toachi River appear to have an improved available flow profile to an unwary or unsuspecting observer. 

CONCLUSIONS
The FRN does not recommend CDM validation for the Toachi-Pilatón Hydroelectric Project in Ecuador due to gross deficiencies for meeting additionality requirements. The project has been planned to be incorporated into the energy matrix in Ecuador for many years, and has already secured 100% of its funding, and formally started construction in 2008. The important deficiencies in the stakeholder participation process, as well as general social and environmental management considerations for the project, are quite serious and very concerning. 

Clearly, the Toachi-Pilatón hydroelectric project has a long way to go before it will be able to be considered as a model for sustainable hydroelectric development that is worthy of being endorsed by the UNFCCC. 

Thank you for considering these comments for the determination of the validation of the Toachi-Pilatón Hydroelectric Project to receive status as part of the Clean Development Mechanism. 

Sincerely, 

Matthew Terry
PRESIDENTE
Fundación Río Napo
Casilla 15-01-30
Av. Francisco de Orellana 707 y Tarqui, Piso 2
Tena – Napo – Ecuador 
TEL (593-6) 288-7438
CEL (593-9) 444-8277
FAX (593-6) 288-8888
info@rionapo.org
www.rionapo.org