Scott Dam at Lake Pillsbury — a key component of the Potter Valley Project. Photo: PG&E.


PG&E’s license to operate the Potter Valley Project expires today. The license expiration marks the first step in the decommissioning process of the project, and the likely removal of the Scott and Cape Horn dams.

PG&E has been looking to rid itself of the Potter Valley Project — a hydroelectric system that diverts thousands of acre-feet of water each year from the Eel River into the headwaters of the Russian River — and the costs associated with it for years. PG&E submitted a letter to the Federal Energy Regulatory Commission (FERC) in January 2019 to provide notice that it would not submit an application to relicense the project once the license lapses on April 14, 2022. 

Members of the Two-Basin Partnership – California Trout, the County of Humboldt, the Mendocino County Inland Water & Power Commission, the Round Valley Indian Tribes and Sonoma County Water Agency – filed a proposal to take over the license in May 2020 with the intent to remove Scott Dam and restore fish passage to more than 280 miles of prime spawning and nursery habitat for endangered summer steelhead. 

Two-Basin partners asked FERC for an extension on the application in September 2021 to allow for more time to develop a water plan and strategies for dam removal and subsequent restoration of the Eel and Russian river basins, but the extension was denied.

It should be noted that the Potter Valley powerhouse has been offline since July 2021, when PG&E staff discovered a broken transformer during a routine inspection of the facility. Despite PG&E’s efforts to ditch the project, the company announced earlier this year that it would make the necessary repairs to bring the powerhouse back online.

“PG&E has completed its evaluation of whether to replace the transformer and concluded it is beneficial to PG&E’s electric generation customers to proceed with the work necessary to return the powerhouse to full operational status,” PG&E stated in a Feb. 1 letter to stakeholders. “… PG&E does not have a schedule for returning the powerhouse to service. Our experience with this kind of work indicates the repairs could be completed in the next couple of years, but we will not know until the detailed engineering is completed later this year.”

PG&E spokesperson Deanna Contreras noted that the license surrender process “is likely to take more than five years” so replacing the transformer “makes economic sense for our electric generation customers.”

“Based on our analysis, the ‘payback’ period for investment in the new transformer is about five years,” she wrote in an email to the Outpost. “In this case, payback simply means the point at which the benefit of operating the powerhouse outweighs the cost of purchasing replacement power for our customers. …The transformer will need to be engineered, custom-built, transported and installed, which could take a couple of years.”

Although the Two-Basin Partnership’s initial bid to take over the license wasn’t successful, Redgie Collins, legal and policy director for CalTrout, remains optimistic that dam removal will eventually move forward.

“The future of Potter Valley is a return of native spawning grounds and salmon and steelhead running through pristine habitat and a return of abundance to the Eel River,” he wrote in an email to the Outpost. “…PG&E can’t afford to operate the project, let alone pay the $3 to 5 million per year just to keep the project in place. That’s not even including the litigation costs should they attempt to delay surrender.”

But the timeline is still unclear. ​​Alicia Hamann, executive director of Friends of the Eel River, said decommissioning could begin in the next few years if PG&E is motivated to act swiftly.

“Following [today’s license expiration], we expect to see FERC order PG&E to begin a license surrender proceeding,” Hamann told the Outpost. “Within 90 days of that order, we should see PG&E issue a schedule for the license surrender process and that will give us some more information about the timeline of events.”

The license surrender process usually takes about two years, but Hamann anticipates that it could take more time as we are entering “an era of lots and lots of dam removals.”

“We actually haven’t seen a lot of dam removals and so there’s not a ton of precedent for exactly how this process is going to go,” she said.

Collins added that CalTrout is prepared to negotiate a settlement agreement with Northern California tribes and PG&E to initiate the decommissioning process.

“We’ve got all the data and engineering studies to get a deal done quickly,” he said. “…PG&E will enter the decommissioning process with $2 million worth of studies that show in extreme detail how to remove both dams.”

FERC will soon issue an annual license to PG&E which will continue to operate the Potter Valley Project under the existing license conditions until FERC issues a final license surrender and decommissioning order.