Counties Scramble to Meet Deadline After PG&E Abandons Eel River Power and Water Project

In late January, PG&E was getting headlines everywhere for its decision to seek Chapter 11 bankruptcy protection — a move that could affect millions of California households.

But on Jan. 25, the company made an announcement that may have an even more dramatic effect on a swath of Northern California stretching from Humboldt County to northern Marin.

That was the day that the San Francisco-based utility announced with no warning that it was abandoning its effort to relicense the Potter Valley Project, a hydroelectric complex that not only generates power but provides a lifeline to communities along the Russian River with water diverted from the Eel River.

On its way from one river to the other, water flows through two dams, a diversion tunnel bored through a mountain and a powerhouse. Much of the flow winding up in Lake Mendocino, which supplies communities in the Russian River watershed.

Janet Pauli, chair of the Inland Water and Power Commission of Mendocino County, a joint powers authority concerned with the future of the Potter Valley Project, stressed the value of the water to those communities.

“The water supply that comes through that project is either used directly or indirectly by over half a million people,” Pauli said at a March 29 meeting of the Eel Russian River Commission, made up of supervisors from Humboldt, Mendocino, Lake and Sonoma counties, whose sole focus is the Potter Valley project. “So, economies of Mendocino County, Sonoma County, and northern Marin County, absolutely impacted.”

Path to Abandonment

PG&E's path to its January announcement began two years ago.

In April 2017, PG&E filed paperwork with the Federal Energy Regulatory Commission starting the process of relicensing the Potter Valley Project. Then last year, PG&E said it intended to auction off the project.

PG&E's announcement it would no longer seek a new license to operate the complex set FERC's "orphan project" process in motion, with the commission issuing a notice in March soliciting applications for the Potter Valley Project.

Prospective licensees have until July 1 to file applications with FERC. If no new licensee appears and PG&E doesn't change its stance, FERC could decommission the project.

A new licensee must be able to pay for the continued maintenance and operation of all project facilities and be capable of monitoring and complying with regulatory requirements arising from the project's impacts. At this point, it's not known whether FERC has received applications to assume the Potter Valley license.

The project has been controversial for years, with a host of competing interests seeking to maintain the complex, dramatically alter it or shut it down, with debate centering on how water should be provided for Eel River salmon, Mendocino and Sonoma County agriculture, household water supplies, recreation and, lately, even fire suppression.

The issues raised by the project prompted Rep. Jared Huffman, who represents the North Coast, to form an ad hoc working group involving federal and state regulatory agencies, tribes, county governments, water agencies and advocacy groups at the start of the Potter Valley relicensing process two years ago.

The group is considering a broad range of scenarios for the project's future — trying to find a way to restore the Eel River while providing water security to Russian River communities.

Conflicting Views on Display

The conflicting views about the project's future were on full display at the Eel Russian River Commission meeting last week.

Native tribes and fisheries activists have lobbied for the removal of various components of the complex — its diversion tunnel, its two dams, or both — as a step toward restoring chinook salmon and steelhead trout to their historic spawning grounds on the upper Eel.

Tim Nelson, the Wiyot tribe's natural resources director, told commissioners "all infrastructure" related to the project must be removed "to restore balance to the river." Doug Hutt, a member of the Round Valley Indian Tribes, said the tribal government opposes "any diversion from the natural watershed at any point, in perpetuity.”

Stephanie Tidwell, executive director of Friends of the Eel River, said the debate over the project's future and its impact has entered "uncharted waters."

“It’s time for us to all hit the reset button, look at what’s possible, and get realistic about the fact that these dams have significant ecological and safety issues," Tidwell said. "We think that there could possibly be a solution that would bring us a free-flowing Eel River back, and still provide necessary winter water to the Russian River. But we need to get more serious about having some open and honest discussions about what that looks like.”

James Gore, a Sonoma County supervisor and vice chair of the river commission, said he doesn’t believe the solution is to decommission the Potter Valley Project.

“I don't think it's going to be shut down, because there's those of us who it's too vital of a resource to just go cold turkey,” said Gore. “If you did this, you would have communities that would be dried out. You basically turn an issue that needs to be resolved not just into a crisis, but into a nightmare.”

Still, Gore is optimistic that some entity will come forward and be approved to take over the project because it is vital to so many people.

“We need to make sure we make it right on both sides of the tunnel,” said Gore. “The reality is — like many of these issues in California, whether it's the Potter Valley Project ... whether it's the Delta, whether it's the aqueducts going down into Southern California — we live in a place where infrastructure was built and communities were built on top of it.”

Kyle Farmer, who works at Potter Valley's Magruder Ranch and spoke during public comment, said a solution is out there though time is short.

“We can live in a state that can pay for its water in a way that takes care of the environment and can do it all," Farmer said. "We're capable of this stuff if we value it — we're capable of anything. But that train is leaving the station.”