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PG&E Powerhouse Repair Raises Questions for Future of Potter Valley Project License

A Cement Dam spouts a stream of water from the bottom
Alicia Bales
Scott Dam at Lake Pillsbury, Part of the Potter Valley Project, which diverts water from the Eel River to the Russian River and Lake Mendocino

The fate of the Potter Valley Project took a few more turns this week, with a regional coalition declaring it will not file for the license application and PG&E taking steps to operate the project under an annual license until the next development.

PG&E, which owns and operates the project, announced in 2019 that it would not renew the license or continue to try to sell it. A regional coalition that includes Mendocino and Humboldt counties, California Trout, Sonoma Water Agency and the Round Valley Indian Tribes was the only entity willing to take on the license, which involves multi-million dollar studies and ongoing maintenance and operation costs. In July, a transformer bank went down in the powerhouse, which severely curtailed the amount of water the project is able to divert from the Eel River into the Russian River. PG&E estimates it would cost five to ten million dollars to custom-engineer a replacement and take two years to replace.

On Monday, the coalition sent a letter to the Federal Energy Regulatory Commission, admitting that it was unable to raise enough money for the required studies and that it will not file an application by the time the current license expires in mid-April.

Two days later, PG&E informed the coalition leaders that it had decided to “return the powerhouse to full operational status.” PG&E spokesman Paul Moreno said that, although the exact costs are unknown, the company expects to recoup the costs of the repair within five years.

Alicia Hamann, Executive Director of Friends of the Eel River, is advocating for a speedy decommissioning process. She has some idea of who will pay for the repairs.

“The main transformer bank actually failed in July,” she said. “And there weren’t many folks who were made aware of that right away. So when we found out, Friends of the Eel immediately sent a letter to the California Public Utilities Commission, notifying them that this was happening and giving them a heads up that PG&E may try to replace this infrastructure, and then may seek their approval to get recovery of those costs on the backs of ratepayers, which we think is just totally inappropriate.”

Congressman Jared Huffman, who convened an ad hoc committee dedicated to making recommendations about the Potter Valley Project, doesn’t think the repairs will have an effect on the timeline of what he views as the inevitable decommissioning of the project. While he said in the short term, “it’s a sigh of relief for Russian River water users,” he suspects the company made “a cold-blooded business calculation” and decided to make some money generating power “during X number of years it takes to decommission.” With the coalition out of the running for taking over the license, PG&E is responsible for the facility, and Huffman doesn’t think FERC will let them out of their obligations “quickly or cheaply.”

Janet Pauli, chair of the Mendocino County Inland Water and Power Commission, said “even if everything had gone perfectly,” it’s doubtful the license would have been completed in time. During the last application process, which lasted from 1972-2006, PG&E operated on annual licenses for eleven years. For now, though, Pauli says, “protecting the diversion has to be our main concern.” The Commission is itself a coalition consisting of the county of Mendocino, the city of Ukiah, the Potter Valley Irrigation District, the Redwood Valley County Water District, and the Russian River Flood Control and Water Conservation District. It’s asked each of its five members for $50,000 to pay for the legal expenses it’s incurred in its efforts to satisfy the requirements to apply for the license. Now it’s pursuing the water rights associated with the project. Just this week, a consultant, Brian Godbey and Associates, sent out a survey to people who are dependent on project water to find out if they’d be willing to pay for it. All of the expenses to secure the water since 2019 have been paid by the public entities in the Commission.

Darren Mireau, the North Coast Director for California Trout, thinks there may be a way to continue the diversion without the project. Last year, the California Department of Fish and Wildlife funded a study of three alternatives for diverting water. Mireau favors a scenario that involves removing both dams and pumping water. Operation and maintenance costs are estimated at about $200,000 a year. “Any water management, any water diversion at that location is going to have some operations and maintenance costs, that’s unavoidable,” he said, shortly after the study was released. “The advantage of the full removal of Cape Horn Dam with that pumped diversion approach is you get all of the obstruction out of the river that might impair fish passage…it does shift the cost, I think, to the water users, instead of the fish side, where it appropriately needs to be. In other words, we’re committed to that water supply reliability, but I think the water users have the obligation to pay for it. And if pumping is the best way to do that for fish passage and fishery recovery in the Eel River, I think that’s the best approach.”

Back in November, Pauli predicted the uncertainty that would set in if the coalition gave up on the application. “If we go into the surrender process, the partners that are currently working together in this licensing would no longer be negotiating with FERC. We would become interveners in the FERC process that would mainly be between PG&E and FERC to decide the future of the diversion and all of the infrastructure,” she said.

As part of its license requirements, PG&E biologists have rigorously documented the Eel River basin, from the condition of the fisheries to how often a beloved pair of bald eagles uses which of its nests. Mireau thinks that scientific explorations will continue, even after PG&E departs. “CalTrout has looked at this licensing, or now termination of the license for the Potter Valley Project as a real opportunity to bring attention to the Eel River so we can justify bringing in additional funding to support scientific research and monitoring,” he noted. “Those are all ongoing, but this is a moment in time for this watershed to get some extra attention. And that’s why we have, in part, put so much energy into the relicensing process.”

Local News
Sarah Reith came to Mendocino County in 2008 and worked as a reporter and freelancer, joining KZYX as a community news reporter in 2017. She became the KZYX News Director in March, 2023.