With bankruptcy looming, Pacific Gas and Electric Co. is citing “challenging financial circumstances” as one of the reasons why it’s backing off from renewing its federal license for two of its hydroelectric dams. The move raises a fresh set of questions about how the company plans to maintain its aging network of 169 hydroelectric dams in California amid its financial crisis.
PG&E told the Federal Energy Regulatory Commission (FERC) on Friday that it would no longer try to renew the license for its Potter Valley Hydroelectric Project on the Eel River in Mendocino and Lake counties.
“Regrettably, continued declining energy markets, potential increased costs associated with anticipated license conditions and challenging financial circumstances have caused PG&E to conclude it cannot justify further expenditures to its ratepayers associated with the project,” the utility said in its letter to FERC.
PG&E spokesman Paul Moreno said the pending Chapter 11 bankruptcy proceedings, expected to be filed next week, had little to do with the decision to walk away from the project. He said the company announced it was putting the project up for sale in September.
“We’ve been for quite a while divesting some hydro assets, either through direct sales or through an auction process,” he said. “(Bankruptcy) underscores the decision but was not the primary cause.”
River advocates have been fighting to have the dams removed to revive struggling fish populations. They say the timing of the filing with FERC is a sign the bankruptcy played a role in PG&E’s decision to walk away from Potter Valley.
“What’s really changed here? Bankruptcy, clearly,” said Scott Greacen, conservation director for Friends of the Eel River. “There’s also these looming questions about the safety of the dam.”
PG&E has announced it intends to file bankruptcy next week, as it’s faced with an estimated $30 billion in claims filed by survivors of the 2017 and 2018 wildfires. Multiple lawsuits blame PG&E’s power equipment for sparking the fires, although Cal Fire said Thursday that PG&E wasn’t to blame for the worst of the 2017 fires, the Tubbs Fire in Sonoma and Napa counties. Last November’s Camp Fire, which destroyed the town of Paradise, remains under investigation.
Built in 1908, the Potter Valley project includes a series of tunnels and penstocks, two dams and two reservoirs. Greacen’s organization and others argue the project is so old it could fail in a major earthquake. PG&E says the project is safe.
Moreno said PG&E will maintain the facilities until a buyer is found. Conservation groups hope the end result is that FERC will insist PG&E pays to have the dams torn down. Grecean said estimates for the cost to decommission the project range from $50 million to $90 million.
“PG&E can’t be allowed to simply walk away from its problems on the Eel River,” said Noah Oppenheim, executive director of The Pacific Coast Federation of Fishermen’s Associations, in a written statement.
PG&E and other dam owners have found themselves under increased scrutiny over the safety of their aging hydroelectric facilities following the near catastrophe in 2017 at Oroville Dam.
That dam, owned by California Department of Water Resources, had its spillways fail during heavy storms of February of that year, triggering the evacuation of 188,000 people.
In July 2017, the state Department of Safety of Dams identified 12 PG&E dams out of 93 around the state that needed detailed inspections because they had the potential for similar failures.
Potter Valley wasn’t one of them.
PG&E said at the time that the utility was performing those inspections, following “in-depth evaluations we conducted this winter” after Oroville Dam’s spillways failed.
Moreno said PG&E has no plans to abandon or sell any of the 12 facilities the state singled out as potential trouble spots.