Map of the Potter Valley Project. | Created by Shannon1, Creative Commons License.

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Bad news arrived Thursday morning for the Two Basin Partnership, a regional coalition of agencies working to take over PG&E’s license for the Potter Valley Project, a hydroelectric system that diverts tens of thousands of acre-feet of water each year from the Eel River into the headwaters of the Russian River.

Earlier this month, the Two-Basin Partnership — which is comprised of California Trout, the County of Humboldt, the Mendocino County Inland Water & Power Commission, the Round Valley Indian Tribes and Sonoma County Water Agency — reached out to the Federal Energy Regulatory Commission (FERC) to request a pause in its application, an abeyance of just a few extra months in order to re-evaluate its plans. 

This morning, FERC denied the request, telling the partnership that it has until April 14, 2022, when the current license for the project is due to expire, to file its final license application. If the partnership misses that deadline then FERC may force PG&E to surrender the license, likely leading to the project being decommissioned.

Congressman Jared Huffman (D-San Rafael), who has actively worked to develop a “two-basin solution” that satisfies the sometimes divergent interests of the agencies involved, expressed resolve in a statement issued in the wake of today’s decision.

“The Two Basin Partners have worked diligently to find common ground and resources to pursue a revitalized Potter Valley Project – but we always knew that this would be a major challenge,” Huffman said. “Today’s ruling by FERC is just a new chapter in seeking a Two Basin Solution, and I am committed to doing the hard work needed to achieve that end. This partnership and the stakeholders in the Eel and Russian river basins are strong and ready to take on a new challenge.”

The Two-Basin Partnership has been struggling to finance the takeover. FERC requires roughly $20 million-worth of studies before it will agree to transfer the license, and PG&E has declined to foot any of that bill, as have water users in Mendocino and Sonoma counties. 

The aging hydropower project, which includes Scott Dam, Cape Horn Dam, a diversion tunnel and a hydroelectric plant, no longer makes money, and in 2019 PG&E announced that it would abandon its efforts to sell or relicense the dams. 

The Two-Basin Partnership has been working to form a regional entity that would file the license application and operate the project. FERC gave the partnership 60 days to file a status report, including completed studies that the agency requires. 

Even before the FERC decision announced today, the Two-Basin Partnership’s path to relicensing had begun to look so tricky and unlikely to succeed that local environmental group Friends of the Eel (FOER) recently came out in opposition, urging the partnership to instead allow the license to expire so that decommissioning can begin.

In a Sept. 9 press release, FOER Executive Director Alicia Hamann said, “The lack of meaningful support from Russian River interests, which stand to benefit the most from this proposal, means there is yet no proposal to monetize any future water diversions, and thus no way to support the costs of maintaining a diversion.”

The group says removal of Scott Dam is necessary for the survival of the Eel River’s populations of chinook salmon and steelhead, both of which are listed under the federal Endangered Species Act as Threatened. In the September 9 press release the group said dam removal is inevitable, and decommissioning is the most sensible path toward that goal.

Reached on Thursday, Hamann said she was excited by FERC’s ruling. “This is exactly the kind of reasonable response we hoped for but did not expect to see from FERC – that there needs to be meaningful progress toward relicensing before license extensions can be considered,” she said in an emailed statement. “Absent some miraculous new funding source, it appears that PG&E will begin FERC’s surrender process when the license expires in April of next year. And the dams on the Eel River will be removed soon after.”

Craig Tucker, a consultant who has been working on behalf of Humboldt County in the Two-Basin Partnership, wasn’t quite so happy.

“We are disappointed that FERC denied our request for abeyance,” he said via email. “Still, Humboldt County remains committed to working with our partners on a two-basin solution, whether that means relicensing the project ourselves or working with PG&E on a surrender plan. Both Russian and Eel River communities are facing hardships related to water shortages and we have to work together to solve these problems. We will regroup with partners soon to plan our next steps.”

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