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EBMUD Eyes PG&E Dams
Ever since energy deregulation got under way in California, private companies have been salivating over the prospect of getting a piece of the action. One of the big prizes has been PG&E's vast hydropower network - 174 dams, 99 reservoirs, dozens of power plants, thousands of acres of watershed lands and hundreds of miles of pipelines and aqueducts - worth up to four billion dollars. East Bay MUD says that it wants to acquire part of PG&E's holdings, not to make money from escalating electricity prices, but instead to protect the quality of its Mokelumne River water supply. EBMUD has formed a coalition with agencies in Alpine, Amador and Calaveras counties, all of which are along the Mokelumne. This Upper Mokelumne River Watershed Authority has set its sights on PG&E's Project 137, which consists of two reservoirs, along with several dams and their associated infrastructure. It has an estimated value of about $50 million. Under deregulation, electricity prices are extremely volatile, often changing from hour to hour as consumer usage peaks and then drops. One reason hydropower facilities are so valuable is that they can adjust almost instantly to consumer demand, simply by changing the flow of water through the turbines.
That dramatically alters the downstream flow of the river, however, and EBMUD worries that sudden changes would increase turbidity of the water flowing into its Pardee Reservoir. This, in turn, could be detrimental to water quality and increase treatment costs. "Our greatest fear is that some big company will begin using the river to maximize their profit," says EBMUD board member Katie Foulkes.
Environmentalists are generally favorable, but cautious, about the proposal. "Drinking water quality dovetails nicely with environmental quality," says Steve Wald of the California Hydropower Reform Coalition.
He supports a provision that would set aside 30% of the project's surplus operating revenues for watershed improvements, and notes that most of the profits would stay in local counties, rather than going to corporate stockholders. But he adds that EBMUD has a "mixed" environmental record, and he's skeptical about the agreement allowing local counties to increase their surface water storage. "That does raise our eyebrows."
"We're still a million miles away from anything happening," Foulkes says. The future of PG&E's hydropower facilities is still very uncertain, and the issue is now before the state's Public Utility Commission. The company may auction its dams off piecemeal, but it reportedly favors transferring them wholesale to an unregulated affiliate. State Assemblymember Dion Aroner is sponsoring legislation that would make it easier for public agencies, like EBMUD, to purchase PG&E properties.
The PUC is currently conducting a massive environmental impact report about the sell off of the PG&E hydro system. Wald hopes that the commission uses that information to reach its decision, rather than reaching a back room deal with the company or other potential buyers. "At this stage we don't have any preconceived notion of who should be the owners,' he says. "What matters most is how they operate the dams."
Contact: EBMUD (510) 835-3000 or California Hydropower Reform Coalition (510) 644-2900 ext.105
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