The September 18th meeting of the California Water Commission brought the commissioners to Oroville to discuss organizational issues regarding the State Water Project, hear an the latest on the Thermalito Pumping Plant fire, and receive an update on the status of FERC relicensing for the Oroville facilities. In the afternoon, the commissioners toured the area facilities.
The meeting opened up with remarks from local officials. Mayor Linda Dahlmeier thanked the Commissioners for coming. “When I go to other water conferences, usually I like to go to Southern California because they are talking about water in their world and it’s so different than water in our world,” she said. “There really is less than 2% of the population that lives north of Sacramento – we’re never going to win by the votes, so you have to make them want to like you. You have to make them want to understand the way of life up here.”
She recalled how when visiting Southern California, she was asked by a young man where she was from. After some difficulty placing where Oroville is, she straightened him out. “I am from Oroville,” she told him. “The start of the State Water Project. My water comes from God. Your water comes from me.”
“It’s that whole concept that there’s a generation that has no idea where water comes from, and it’s so eye opening,” she said, pointing out the need to educate the next generation, suggesting that there should be efforts to bring more kids up to Oroville to see teach them about where their water is coming from.
Bill Connelly, Chairman of the Butte County Board of Supervisors, then briefed the commissioners on some statistics and data for Butte County. He noted that the County of Butte was named after the world’s smallest complete mountain range, which is called the Sutter Buttes and is now located in Sutter County. Butte County has a population of 220,000 people, covers 1677 square miles of which 37.62 are surface water. The main industry is agriculture: products include nuts, rice, fruit, cattle and timber, as well as many small specialty ag products. There are also a lot of recreational opportunities in Butte County, such as off-road vehicle trails, hiking trails, and equestrian trails, boating opportunities, fishing, hunting, and wildlife viewing.
When asked by the Commissioners about the recreational value of the dam, Supervisor Connelly said that it doesn’t offset the expense of having the dam in the backyard. “It generally creates low income jobs, and there’s not much revenue from boat sales, our total tourism tax … is about $45,000 a year. The City of Oroville has come close to $400,000 before the casinos, and it’s probably a little over $300,000. I can get you a report, but it does not offset the costs.”
There are increased costs to the city and county, such as dealing with drunk drivers, he said. Also 41,000 acres were inundated that they are not compensated for. “These were things that were done 50 years ago when there was a promise of 12 million people recreating a year, several more campgrounds and permanent lodges,” said Mr. Connelly. “We get about 1.2 million a year and we’ve never had a permanent lodge built, although we’re working on that at the golf course right now. So it’s been pretty much a drain on our community.”
Mayor Linda Dahlmeier added the Department of Fish and Game cutoff fishing in Oroville in the low flow channel. “We have some of the best salmon fishing second to Alaska, and we can’t fish in our own river right now.”
Supervisor Connelly added that it was a $2 million per year hit to revenue. “They claim it was for protection of spring-run salmon so they cut off fishing from the outlet of the afterbay up to the Fish Hatchery Dam,” he said. “The lack of logic is that they killed 30,000 fish here without spawning them, and all those fish are spawning on top of each other, and it doesn’t take a scientist to figure out it wouldn’t hurt to let us go down there and catch a few fish. And it is about a 2 million hit … according to the bait stores that come to me. It used to bring that money right into town.”
AGENDA ITEM 6: STATE WATER PROJECT ORGANIZATIONAL ISSUES
Carl Torgersen then gave the Commission an update on the organizational structure of the State Water Project. He began by acknowledging that there had been issues in the recent past with equipment availability, and that one of the factors was the wages of the trade and craft folks. “We defined the bottom when compared to other municipal utilities in the state of California as far as pay goes,” he said. “Recently, the state was able to negotiate a side labor agreement with the operating engineers union who represent our trades and crafts to get pretty significant increase in compensation. I think it’s an average of about 30%.”
This will help in the short term to hire additional people and get caught up on deferred maintenance, he said. “But what we don’t want to lose sight of is that the concept of sustainability going into the future for the operation and maintenance of the facilities,” he said. He gave the example of the mandate to furlough state employees during the recent economic downturn. “It does no good for the state water project operation; there’s no benefit to the general fund, so that is one example of something that we need to be shielded from, and it makes business sense to be able to do something like that.”
Over the past couple of years, DWR had been looking at alternative organizational structures for operating the State Water Project. The DWR and the State Water Project operate under the same rules and guidelines as all state agencies, but DWR is a water and power utility, which is different from the business side. “The challenges we see facing us in the future are things around some of the constraints we have within state government,” said Mr. Torgersen.
We still have labor constraints to deal with, said Mr. Torgersen. While the raise in wages for trades and crafts is a big deal and is certainly a big help, it doesn’t solve all of the problems, he said. “We have issues in other areas that are out of our control,” he said. “We have some significant salary compaction in the engineering areas where people don’t want to take supervisory positions because in some cases, it’s actually a pay cut for them.” He explained that this was because the union negotiated a pay raise and the previous administration made the decision not to extend this compensation increase to the non-represented employees.
Another constraint is creating new classifications within the civil service. “When I was running operations during energy crisis, we had a need for different types of skill sets – economists, mathematicians to help us,” he said. “We couldn’t do it. They said, go out and hire more engineers.”
We’re going to need more time, people, and skill sets to keep the existing State Water Project going, said Mr. Torgersen. “There is a lot of discussion about water issues in the state, but this is one that isn’t always discussed. Maintaining the existing State Water Project is something obviously we have to do,” he said. “We can have all the water available in the world, but if you can’t move it, you’re out of luck.”
There have been some reports on how to improve the governance structure of the State Water Project, the key ones being from the PPIC and the Little Hoover Commission, said Mr. Torgersen. “My predecessor, Ralph Torres, commissioned a group called Cooperative Personnel Services, a quasi-government agency, to look at what’s been done and try to condense it all and come up with a recommendation,” he said. “What they’ve come up with are some models that are possible.”
One is a JPA; maintenance and operations would be contracted to this JPA and it would then have the authority to do things such as negotiate labor contracts, set salaries and classifications, he said. A public benefit corporation was another model suggested, but he said that probably would not work. Special Legislative Authority where there would be a new set of rules for DWR to operate under written into the water code makes a certain amount of sense, he said.
The JPA concept appears to be functionally best, but there are some issues with that, he said. “The biggest one is how do you move employees from state civil service to working for a JPA,” he said. “Clearly you can’t force employees to quit and go to work for this other entity, so that’s something that really gets back to a hybrid – if we were to do something – between a JPA and some type of special legislation.”
In closing, Mr. Torgersen said: “While in the short term, the raise really helps, and I have to praise the administration for supporting it, we don’t want to lose sight of the fact that for the ultimate sustainability of the utility function of the State Water Project, we really need to look at some other form of governance. And to just be clear on this, what we are focusing on is the piece of the Department of Water Resources and the State Water Project that is doing the work to maintain and operate the system – turn the units on and off if you will – and not necessarily any type of policy related things. I think that clearly would need to remain with the State, making decisions on water policy. What we’re focusing on are just the people that are out there that keep the project operating.”
AGENDA ITEM 7: THERMALITO FIRE UPDATE
Officials then briefed the Commission on the Thermalito fire investigation. The Thermalito Pumping Plant sustained significant damage to the control room and the electrical cables and systems in the cable gallery area during a fire which occurred last year on Thanksgiving Day. Fire investigators are confident that the fire started in the cable gallery area, but because so much evidence was incinerated by the fire, the root cause could not conclusively be determined.
The plant is the final stages of clean up which is expected to be completed by the end of September or early October. During the clean up process, 3800 cubic yards of debris has been removed, 350,000 pounds of scrap steel has been recycled, and 905,000 gallons of wastewater has been transported from the plant for treatment and disposal. So far, clean up costs have totaled $53 million, significantly less than the $67 million that was budgeted; however, they have not disassembled the power generating units yet as they are waiting for the results of the value engineering report which will determine the future of the plant, officials said.
The estimate to restore the plan to a pre-fire condition is currently about $74 million with a $30 million contingency; the contingency is because not all systems of the plant are able to be examined at this point. DWR is doing a business case analysis to determine what to do with the plant, considering the options from full restoration to full decommissioning, the results of which are expected in early October.
AGENDA ITEM 8: FERC RELICENSING
Hydropower facilities are licensed by the Federal Energy Regulatory Commission. The Oroville facilities were originally granted a 50 year license on February 1st; that license expired in 2007. Even though the relicensing process began in 1998, the process still has not been completed. The National Marine Fisheries Service needs to complete its opinion before FERC can approve the relicensing of the facilities.
The capacity of the Oroville facilities, which include one power plant and two pumping/generating plants, is 763 MW. The boundaries for the project include all of Lake Oroville, the forebay, the afterbay, and the facilities, but does not include the low flow channel that runs through the city of Oroville. “Local officials pointed out the complexities of relicensing and having a major state water project go right through the community of Oroville,” said Mr. Torres. “This is kind of unique. Most of the other facilities are in rural and isolated areas. Most of the Southern California reservoirs and facilities are not near populated areas. But here in Oroville, it runs right through town.”
The process began in 1998. “We needed to choose which type of relicensing process we would use, and at that time, there were two processes available to us: the traditional and the alternative licensing process,” he said. “The main difference between the two was that the alternative licensing process was very collaborative. You bring in stakeholders, the community, and everyone involved. The traditional process was more isolated from the community, where the Department would set some parameters, there would be a few meetings with the community, and then FERC would take over from there.”
“We chose the alternative licensing process because there was a disconnect between the Department and the community in the earlier years of the project,” he said. “We felt the alternative licensing process was necessary to help bring the community in to address a lot of those issues that had occurred historically.” The protection, mitigation and enhancement measures are contained in the settlement agreement, which was developed with community stakeholders and other public agencies. Mr. Torres said the negotiations were tense and complex, with up to 75 entities at the table at one point, but an agreement was reached in 2006.
FERC and DWR then did the required environmental analysis with both of those processes completed in 2007. The US FWS and NOAA issued their opinions, and in 2010, the State Water Resources Control Board issued the water quality certification. “There are a lot of pieces involved in a FERC license,” said Mr. Torres. “It just isn’t FERC; in fact, some of the other agencies are probably requires as much effort to comply with as does FERC. FERC is the vehicle for which a lot of agencies and stakeholders can be involved.”
“This is where we are today,” said Mr. Torres. “We still don’t have a license and we are in our 5th year of an annual license. What they do is just continue all the conditions that were in the previous license on a yearly basis. Thing we are waiting for is the biological opinion from NMFS. When that’s issued, then FERC will issue its license.”
Mr. Torres then discussed the settlement agreement. He explained that there are two important parts, Appendix A and Appendix B. Appendix A is all of the things that FERC is will include in their license that are required by FERC. Appendix B contains the measures that reflect the agreements reached with stakeholders; they aren’t FERC requirements and are discretionary by either the Department or the water contractors.
The signatories to the settlement agreement included all of the state and federal agencies, but not the State Water Resources Control Board. Although they were a heavy participant, since they issued the permit, they didn’t feel they should be a signatory to the agreement, Mr. Torres explained. Other important signatories are American Rivers, Kon Kow Valley Band of the Maidu Indians, local agencies such as the City of Oroville and the town of Paradise, Oroville business corporations and associations, the Feather River Park District, and Oroville Recreation Advisory Committee. Twenty four state water contractors signed the agreement, but Mr. Torres noted that the local water contractors did not sign the agreement.
They are expecting to receive a license with a term of 50 years. The estimated cost for implementing all of the items and conditions over the 50-year term of the license would be $1 billion in 2006 dollars. “There are a lot of components. Land use and management – we are required by the US Forest Service to do a fuel load management plan for that area within the FERC boundary. Recreation areas – total cost for new facilities plus operations and maintenance of the recreation facilities at Oroville will be about $438 million,” said Mr. Torres. “We have some local projects; one of them is the supplemental benefit fund which is a fund that is created for the community and under control of the community so they can implement projects that you might say the State Water Project took away from them, perhaps like recreation opportunities they had near the river; those types of things. The fund is for the community to decide which of those will bring those enhancements back to the community.”
Mr. Torres pointed out that this is discretionary. “There is nothing under the state water contracts that says the we could bill the water contractors for this,” he said. “Water contractors agreed to provide this kind of funding.”
There is $77 million earmarked for the protection of sacred sites around the reservoir, said Mr. Torres. He noted that tribes have government-to-government relationships so they respond directly to FERC; three of the local recognized tribes agreed to negotiate with the State but were under no requirements to do so. “They formed a tribal unity council and we formed another advisory council for the tribes. We were unable to reach an agreement, but we’re still negotiating,” said Mr. Torres. “The relationship with the tribes is something that has been going on before relicensing and will continue separately from licensing. One of the issues related to that is that during the design and construction of the dam, there were a lot of remains that had to be removed from the reservoir area. There are the Native American remains that are still in storage in a warehouse in west Sacramento. We’ve wanted to return them but there’s been some difficulty in identifying the appropriate location for the internment of those remains. And so that’s where a lot of the discussions have been going on.”
He then presented a slide which shows all of the projects that are included under the new license. They include recreation enhancements such as new campgrounds and a new swimming facility, environmental enhancements to maintain temperatures in the Feather River, and mitigation projects to protect wildlife around the forebay and afterbay. He noted that the environmental protection and mitigation required under the license will cost $454 million over the life of the license.
One of the most difficult pieces of the environmental part of the license will be trying to maintain cold water for the fisheries, said Mr. Torres. “This cold water issue created quite a dilemma for operations,” he said. “Rice growers here in this area had prior water rights, so when the project was built, those rights were maintained. There was an agreement on how the water would go through the afterbay and then be released at two exit points to the local water agencies who then distribute to the rice farmers. However, in order for us to maintain colder water for fisheries, it meant that the rice growers were going to receive colder water for their farming, and so they had a claim that the cold water was impacting the yield of their crops.”
He explained that DWR entered into an agreement to conduct studies to determine the magnitude of the impact, and then agreed to pay them for the loss of yield in their rice production. “The first payment was made a few years ago; it covered a 3 year time period and it was about $3 million,” he said.
The other issue is regarding regional habitat expansion, Mr. Torres said. “NOAA fisheries is still looking at trying to restore fishery habitat in the upper reaches above rim dams, of which Oroville is considered. It is a very expensive proposition to try and get fish passage past a 750 foot high dam, and what’s even more difficult is to try and collect the smolts as they come back down,” he said. “Plus we would be putting fish in PG&Es projects on the north fork and several dams that they have up there, so we teamed with PG&E to try and come up with an alternative to fish passage. We reached an agreement with NOAA fisheries and others, including American Rivers, that we would provide new habitat for 2000 salmon somewhere else besides these areas, and that is the part that we submitted earlier to NOAA fisheries. They are reviewing it right now. They haven’t chosen a location where that would occur yet, but that is in lieu of this fish passage.”
He also noted that all of the federal agencies have the right to include issues, called Section E issues, into the license; FERC essentially just staples those to the license. BLM, FWS, NOAA all of those have that right, as well as the SWRCB whose jurisdiction appears to be almost as strong as FERCs over license conditions. “For example, modifications that are done on environmental issues; the control board reviews those and can make modifications, and those are submitted to FERC. What we don’t know because the license hasn’t been approved yet, is how that’s going to work and who is going to trump who, whether it’s FERC of the control board. And so FERC and the SWRCB has been working together to solve that issue.”
Mr. Torres noted that there was litigation on the adequacy of the CEQA document, with the court ruling in DWR’s favor in June of 2012. That has since been appealed.
“Where we are today is we’re still waiting for a license, and we’re still waiting for the NOAA biop for green sturgeon that will allow FERC to provide us that license,” said Mr. Torres. “In the meantime, entities such as the City of Oroville have not been able to collect monies that we’ve agreed to such as under the supplemental benefits fund because that has to be triggered by the issuance of a license,” although he did note that some interim projects have been implemented, such as additional shade ramadas, increased access to the Feather River, and the River Bend Park.
For more information:
- Click here for the agenda for the September 18 meeting.
- Click here for the webcast.
- Click here for SWP power point presentation, Agenda Item 6.
- Click here for the Thermalito Pumping Plant power point presentation, Agenda Item 7.
- Click here for the FERC relicensing power point presentation, Agenda Item 8.
- Click here for DWR’s page on the relicensing of the Oroville facilities.