Future of Potter Valley power project could hinge on options for dam at Lake Pillsbury

Sonoma County’s water agency is one of five partners putting up $400,000 for an assessment of the economic, environmental and other issues involved in taking over the federal license for a remote Mendocino County hydropower project that plays a key role in the North Bay’s water supply.

The partnership, which includes Mendocino and Humboldt counties, local tribes and environmentalists, is the lone entity seeking to acquire the license to the Potter Valley Project, owned by PG&E since 1930 but surrendered by the debt- ridden utility in January and still facing a 2022 relicensing deadline.

That action revived a collision of interests that has almost nothing to do with the power generated at an outdated hydro plant at the north end of Potter Valley and focuses instead on the 20 billion gallons of water a year diverted from the Eel River into Lake Mendocino, a Russian River reservoir near Ukiah.

Environmentalist interests, including California Trout, a member of the partnership, have long sought removal of a 138-foot concrete dam on the Eel River in Lake County, which blocks protected salmon and steelhead from spawning habitat in the upper Eel watershed.

But Scott Dam, built in 1922, is also a key piece of the project that diverts water to towns and ranches along the upper Russian River from Potter Valley to Healdsburg and is a critical source for Sonoma Water, which delivers water to 600,000 customers in Sonoma and Marin counties.

At stake is the health of native fish in the Eel River, which have the National Marine Fisheries Service squarely on their side, and the water needs of Mendocino and Sonoma counties, including Potter Valley, which produces $34 million worth of wine grapes, cattle and other products a year, and the famed Alexander Valley vineyards of Sonoma County.

The five partners have committed to a “two- basin solution” endorsed by North Coast Rep. Jared Huffman and intended to accommodate the the both the Eel and Russian river interests. They have hired a consultant for a $400,000 study addressing the web of issues and potentially charting a path toward control of the Potter Valley Project.

The partnership faces an April 2020 deadline to submit a plan, including finances, fisheries restoration and potential modifications of the project to the Federal Energy Regulatory Commission.

“We don’t really know what the answers are going to be,” said Pam Jeane, Sonoma Water’s project manager. “There are a lot of benefits to the project; a lot of liabilities to the project.”

“There are a lot of unknowns,” said Janet Pauli, a Potter Valley rancher who chairs another partner, a coalition of local agencies called the Mendocino County Inland Water and Power Commission.

The cornerstone of any plan must be that “you can’t remove the project entirely,” she said. “At some point in the year the water needs to come through the project,” maintaining the inter-basin transfer.

CalTrout has identified Scott Dam, which impounds Eel River water in Lake Pillsbury, as one of five aging dams it considers “ripe for removal,” especially in the wake of PG&E’s license surrender.

There is, however, a potential middle course backed by Friends of the Eel River, a Eureka-based nonprofit that has long called for the dam’s removal.

David Keller of Petaluma, the group’s Bay Area director, said it would involve removal of Scott Dam, which he said is structurally unsafe, and allow diversion of the Eel River at a smaller dam downstream in Mendocino County, shunting water through a tunnel and pipeline downhill into the powerhouse and Lake Mendocino during wintertime high flows.

The so-called “run of the river” plan would seemingly clear the way for the Eel River’s fish and maintain the Russian River’s historic reliance on the water transfer, which Keller described as “co-equal goals.”

“The only way to take on the project is to take down the dam,” he said.

But the thornier problem likely is money.

PG&E was on the verge of declaring bankruptcy because of due to wildfire liabilities when it abruptly dropped plans to sell or seek relicensing of the Potter Valley Project nearly a year ago. But a spokesman said the utility had been seeking to shed unprofitable hydro projects for years.

The little powerhouse generates 9 megawatts of power, about 0.1% of PG&E’s total, and it costs more than alternative sources of renewable power on the open market.

But any new operator would almost certainly be on the hook for the $55 to $90 million cost of a fish ladder at Scott Dam or about $70 million to remove it.

Sonoma Water officials have said they would likely need federal and state financial assistance to set up management of the project.

“We’re pretty sure the project is not self-sufficient, but we don’t know to what degree,” Jeane said.

Curtis Knight, CalTrout’s executive director, said in a statement the study by Stillwater Sciences would “allow us to move this project forward in an informed way where science drives decision-making.”

If the partnership decides not to acquire the project, the federal agency, known as FERC, would likely order PG&E to engage in a license surrender process involving detailed studies and possible obligations, Jeane said.

Sonoma Water, the Mendocino County coalition, CalTrout and Humboldt County each put up $100,000 for the study. The Round Valley Indian Tribes, based in Covelo in Mendocino County, made an in-kind contribution.

You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com. On Twitter @guykovner.