In a private meeting on August 6, Alpine, Amador, and Calaveras county supervisors, local water agency representatives, and East Bay Municipal Utility District (EBMUD) staff and directors agreed to form a partnership aimed at acquiring PG&E's Mokelumne River Hydroelectric Project. The project is an extensive system of dams, diversions, reservoirs, tunnels, flumes, and power houses that begins at Blue Lakes in Alpine County and continues down to the Electra Powerhouse just above Highway 49. It includes both Salt Springs and Bear River reservoirs, Lake Tabeau, and the Tiger Creek regulator reservoir, forebay, and afterbay.

Amador and Calaveras counties agreed to sign an agreement drafted by EBMUD, which laid out basic terms of the partnership. The counties also agreed to support state legislative amendments proposed by EBMUD that would grant the partnership the right of first refusal should the state require PG&E to auction off or sell the hydro project. EBMUD documents we obtained show that Amador Supervisor Tom Bamert first brought up the matter in a joint meeting in April 1998. The county's first public acknowledgment that a partnership was in the making took place this August, 16 months later.

We have urged both counties and EBMUD to include other interested parties#including the Foothill Conservancy, angling, and boating groups#and all others with an interest in the Mokelumne River in any future discussions regarding attempts to acquire the hydro project. We are concerned that without broad involvement, our supervisors may not adequately look out for the environmental and recreational interests of local citizens.

Energy deregulation led to current situation

These events occurred in the larger context of PG&E's announcement that it intended to transfer its hydroelectric projects in California to an unregulated affiliate company, which in turn came about as a result of energy deregulation in California in 1996. Rural counties, led by the Regional Council of Rural Counties (RCRC), opposed the transfer and initially supported auction of the projects with the right of first refusal going to local entities and partnerships. Others, including consumer ratepayer groups, independent power producers, and later RCRC, supported a proposal to move the projects into interim state ownership with an auction after six years.

To gain support for its own proposal, PG&E voluntarily entered into a series of agreements with various interests, including the California Manufacturers Association, the International Brotherhood of Electrical Workers, and a consortium of eleven environmental groups: Foothill Conservancy, American Rivers, Friends of the River, California Trout, Trout Unlimited, American Whitewater Affiliation, Audubon Society of California, California Outdoors, California Hydropower Reform Coalition, California Sportfishing Protection Alliance, and the Planning and Conservation League. The environmental agreement wouldhave established a $225 million to $275 million fund intended to increase flows on dammed rivers until new federal license conditions are put in place for each hydro project (see previous story). PG&E also established a value of $3.3 billion for its hydro assets. That amount would be remitted to PG&E customers as electricity bill credits.

The PG&E proposal was met with a fair amount of skepticism in the state legislature, in part because its terms were announced only five days before the end of the summer legislative session on September 10. As a result, no consensus could be reached in the committee reviewing the proposed legislation, and no action was taken. The Legislature will take up the matter again when it reconvenes in January 2000.

Next steps uncertain

PG&E has now petitioned the state Public Utility Commission to allow it to auction off its individual hydroelectric projects. Such an auction could put the projects out for the highest bidder and fragment system ownership. Out-of-state companies, including Duke Power and Enron, are potential project buyers. The winning bidders would inherit the existing federal licenses for the projects, which for the most part do not provide adequate flows for the affected aquatic ecosystems. And leading federal licensing attorneys contend that the state cannot compel any environmental improvement as part of the ownership transfer.

Whether PG&E's auction gambit is real, or simply an effort to force the Legislature's hand, remains to be seen. Concerned environmental, fish, and boating organizations are regrouping and reexamining the divestiture situation. And RCRC is proposing a large, regional Joint Powers Authority to buy and operate all of the projects. Whatever happens, Foothill Conservancy will continue to participate in this process on both a regional and local level to represent the interests of our rivers and the people who use them.