Loading...
HomeMy WebLinkAbout09.28.20 Email from Paul Gosselin FW_ DeSabla hydropower plant project - 4.04C From:Gosselin, Paul To:Alpert, Bruce;Bennett, Robin;Clerk of the Board;Connelly, Bill;Cook, Holly;Lambert, Steve;Lucero, Debra; McCracken, Shari;Paulsen, Shaina;Pickett, Andy;Ring, Brian;Ritter, Tami;Rodas, Amalia;Sweeney, Kathleen; Teeter, Doug Cc:Buck, Christina Subject:FW: DeSabla hydropower plant project - 4.04C Date:Monday, September 28, 2020 9:39:45 AM Attachments:20200601-5314(34103287).pdf DeSablaExecSum.pdf Supervisor Lucero I attached two documents that provides background on the DeSabla/Centerville Hydropower Project. One document from May 2007 provides an overview of the initial relicensing process and issues. PG&E announced in 2017 that they were withdrawing from relicensing and were initiating a process to sell the project. The second document from June 2020 is a quarterly report submitted by PG&E to FERC. I hope these materials addresses your questions. Thank you. , Director Butte County Department of Water and Resource Conservation 308 Nelson Avenue Oroville, CA 95965 Office: (530) 552-3590 From: Lucero, Debra <DLucero@buttecounty.net> Sent: Saturday, September 26, 2020 7:40 AM To: Gosselin, Paul <PGosselin@buttecounty.net>; Buck, Christina <CBuck@buttecounty.net> Cc: Pickett, Andy <APickett@buttecounty.net> Subject: DeSabla hydropower plant project - 4.04C Hello Paul, Christina: Is it possible for you to send me background information on 4.04 C, i.e., the request letter by the Centerville-Schoolhouse Group, previous studies or information on the DeSabla hydropower plant in our archives or other information that would inform our BOS direction? I would like to better understand the current situation. Thank you. Debra $¤¡±  ,´¢¤±® Butte County Supervisor District 2 269 E. 3rd St., Ste. 100 Chico, CA 95928 Pacific Gas and TM Electric Company Annette Faraglia Mailing Address Chief Counsel, Hydro Generation P.O. Box 7442 Law Department San Francisco, CA 94120 Street/Courier Address Law Department 77 Beale Street San Francisco, CA 94105 (415) 973-7145 Fax: (415) 973-5520 E-Mail: Annette.Faraglia@pge.com June 1, 2020 E-Filing Ms. Kimberly D. Bose, Secretary FEDERAL ENERGY REGULATORY COMMISSION st 888 1 Street, N.E. Washington, D.C. 20426-0001 Subject: DeSabla-Centerville Project, FERC No. 803-087 Dear Secretary Bose: On June 16, 2017, the Federal Energy Regulatory Commission (FERC or Commission) issued a letter to Pacific Gas and Electric Company (PG&E) Plan and Schedule for the Sale and Transfer of the DeSabla-Centerville Project to file quarterly progress reports starting September 1, 2017, including: (1) an update on the implemented plan and schedule; (2) the progress made in negotiating the sale and transfer of the 1) Update on the implemented plan and schedule. PG&E issued a Request for Offers (RFO) seeking proposals for the acquisition of the DeSabla-Centerville Project (DeSabla) on September 6, 2017. Following is a brief summary of the RFO process that has been completed thus far: During the first week of September, interested parties (including those who submitted statements of interest to the Commission) received a direct contact from -Disclosure Agreement (NDA) that needed be executed and returned, affording the interested party access to an Information Memorandum and detailed facility information contained in a Virtual Data Room. PG&E received twenty-eight (28) signed NDAs from various parties, including independent power producers, public utilities, institutional investors, and local government entities. Each party that signed and returned an NDA received a form of indicative proposal and statement of qualifications during the week of October 16, 2017. PG&E originally expected to receive completed indicative proposals from interested parties by the end of October. However, based on the feedback received from Kimberly D. Bose, Secretary FEDERAL ENERGY REGULATORY COMMISSION Re: DeSabla-Centerville Project, FERC No. 803-087 June 1, 2020 Page 2 for submitting indicative proposals was extended to January 5, 2018. PG&E received seven indicative proposals from interested parties. PG&E evaluated the indicative proposals and narrowed the list to the four entities it deemed most qualified to move forward in the process. These entities completed more detailed diligence, including physical inspection of the facilities by three of the entities. On April 9, 2018 PG&E invited the entities to submit final proposals. At that time, PG&E provided each entity with a Form of Letter of Intent and a draft Term Sheet for their use. As of May 4, 2018, PG&E received proposals from all finalists. Following evaluation of the proposals PG&E selected a prospective buyer for the Project and executed a non-binding Letter of Intent with said prospective buyer on June 21, 2018. 2) Progress made in negotiating the sale and transfer of the Project. Although PG&E and the prospective buyer of the Project are well into negotiations on the Asset Purchase and Sale Agreement and related Exhibits, Schedules, and ancillary agreements, progress on negotiations was adversely impacted by the interconnection studies. The prospective buyer has completed confirmatory due diligence activities, including evaluation of real property title and other legal records and requirements. Negotiations are nearing completion regarding specific business terms for the potential sale. The parties expect to finalize the various Exhibits and Schedules and execute a Purchase Agreement in late Q3 or early Q4 2020. 3) Other relevant information. and transfer of DeSabla and will work diligently to expedite the process. We ing the extraordinary circumstances creating the current delays and will strive to keep the Commission informed of any resulting changes to the process. Kimberly D. Bose, Secretary FEDERAL ENERGY REGULATORY COMMISSION Re: DeSabla-Centerville Project, FERC No. 803-087 June 1, 2020 Page 3 If you have any questions please contact Mike Schonherr, Director, Strategic Agreements at (415) 973-4535 or mike.schonherr@pge.com. You can also reach me at (415) 973-7145 or annette.faraglia@pge.com. PG&E thanks the Commission staff for its continued efforts in trying to achieve the best result for the DeSabla Project and all interested parties. Sincerely, Annette Faraglia Chief Counsel, Hydro Generation cc: Terry L. Turpin, Director Office of Energy Projects, FERC John Katz, Deputy Associate General Counsel for Energy Projects, FERC Eagle Creek Renewable Energy, LLC Valtec Power, LLC Butte Creek Improvement Company, Inc. Paradise Irrigation District KC Hydro (family of companies) United States Forest Service California Sportfishing Protection Alliance, Friends of Butte Creek, American Whitewater, and Friends of the River DeSabla-Centerville Service List, FERC Project No. 803 CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing document upon each person designated on the official Service List in this proceeding (Project No. 803) in accordance with the requirements of Rule 2010 of the st Dated at San Francisco, California this 1 day of June , 2020 /s/ Lynn Powell LYNN POWELL PG&E Law Department 77 Beale Street, B30A-3012 San Francisco, CA 94105-1814 (415) 973-3164 PACIFIC GAS AND ELECTRIC COMPANY DeSabla-Centerville Hydroelectric Project FERC Project No. 803 Draft License Application (DLA) Volume I: Executive Summary, Initial Statement and Exhibits A, B, C, D, F, G and H May 2007 © 2007, Pacific Gas and Electric Company Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 Executive Summary Draft Application for License for Major Project – Existing Dam DeSabla-Centerville Project, FERC Project No. 803 Pacific Gas and Electric Company May 2007 1.0Purpose of Executive Summary Pacific Gas and Electric Company (PG&E or Licensee) is filing with the Federal Energy Regulatory Commission (FERC or Commission) a draft Application for New License (draft license application or DLA) for its existing 26.4 megawatt (MW) installed capacity DeSabla- Centerville Hydroelectric Project, FERC No. 803 (Project). The Project is located on Butte Creek and West Branch Feather River (WBFR) in Butte County, California. The Project consists of 3 developments (Toadtown, DeSabla and Centerville), which collectively include 3 reservoirs, 3 powerhouses, 14 diversion and feeder dams, 5 canals, and associated equipment and transmission facilities. At the current time, PG&E is not proposing to add capacity or make any major modifications to the Project or its operation under the new license. The current license expires October 11, 2009. Licensee is using FERC’s Integrated Licensing Process (ILP) as found at 18 CFR Part 5. The ILP is designed to create a more efficient and timely licensing process for all participants. This is one of the first uses of the ILP nationally, and the first use of ILP for relicensing a hydroelectric project located in California. This Executive Summary describes and summarizes the information contained in the two volumes comprising the draft license application. The intent of this Executive Summary is to define the purpose and provide a summary of the draft license application (DLA) for its readers. For additional detail, the reader is directed to the individual sections of the draft license application. 2.0Key Drivers in Relicensing the DeSabla-Centerville Project In addition to the typical resource issues that arise in most hydro relicensing proceedings, there are three key drivers influence the relicensing of the Project: (1) the Project’s diversion of water from WBFR to Butte Creek provides critical cool water habitat which would not otherwise exist for threatened Central Valley spring-run Chinook salmon and steelhead in Butte Creek, (2) Centerville Powerhouse is near the end of its service life and, following a thorough evaluation by Licensee will likely require rebuilding, refurbishing or decommissioning during the next license term, and (3) forecast Project economics are marginal, even using a higher market valuation for Project generation as an eligible Renewable Portfolio Standard resource. Each of these drivers is being considered in developing a proposed Project for the next license term. May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-1 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 In regards to item (1) above, a key feature of the hydro project is its trans-basin diversion of water from WBFR into Butte Creek. This trans-basin diversion, developed for power generation purposes, also provides the cold water to create additional salmon and steelhead spawning habitat in Butte Creek. Butte Creek was identified years ago by State and federal resource agencies as having a high potential for helping in the recovery of Central Valley spring-run Chinook salmon and Central Valley steelhead, both now listed as threatened species under the federal Endangered Species Act (ESA). These resource agencies have worked for more than a decade to successfully improve water quality, install fish screens and remove barriers to fish migration on Butte Creek.Since 1999, Licensee has prepared annual Project Operations and Maintenance Plans in consultation with California Department of Fish and Game (CDFG), National Marine Fisheries Service (NOAA Fisheries), and U. S. Fish and Wildlife Service (USFWS) for the purpose of maximizing the cool water benefits the Project provides to spring- run Chinook salmon in Butte Creek during the summer months. These combined actions have produced spectacular results, such that Butte Creek has experienced recent returns of 10,000 to 20,000 spawning salmon per year, averaging 70 percent of the total population of Central Valley spring-run Chinook salmon. While continued operation of the Project provides a significant benefit to the spring-run Chinook, altered operation of the Project to optimize salmon and steelhead habitat has also reduced power production. This impact has been predominately to Centerville Powerhouse which has seen its average annual generation reduced by up to 50 percent. In regards to item (2) above, the Project includes three powerhouses: DeSabla, Toadtown, and Centerville. While the DeSabla and Toadtown powerhouses (built in 1963, and 1986, respectively), are relatively new, the Centerville Powerhouse has been in service for over 100 years. A condition assessment performed in 2005 determined that key features of the Centerville Powerhouse facilities are near the end of their useful service life, and will, following a thorough evaluation by Licensee, likely require rebuilding, refurbishing or decommissioning at substantial cost during the next license term. The Centerville facilities are not needed for the trans-basin diversion of water, but provide a point of delivering this water to Butte Creek. Study results from the water temperature and Project operations models that were developed as part of the relicensing studies will provide more information to assist Licensee in determining the importance of Centerville Powerhouse to the recovery effort. In regards to item (3) above, the Project is presently an economic source of generation, but faces two major new costs in the new license term: the cost of rebuilding, refurbishing or decommissioning Centerville Powerhouse (roughly estimated to be in the range of $20 to $40 million) and the cost of implementing new license conditions. Even at the low end of their likely ranges, these costs are forecast make the Project only marginally economic, even using a higher market valuation for Project generation as an eligible Renewable Portfolio Standard resource. Balancing the scope of new resource management measures to achieve sound environmental protection while keeping the Project economic, operating and continuing to support Salmon and Steelhead habitat in Butte is one of the key challenges of this proceeding. The Project economics presented in the draft license application include only the costs of owning and operating the Project under the existing Project license conditions since adequate information is not yet available for Licensee and other Relicensing Participants to fully evaluate potential May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-2 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 resource management measures for the new license. The Project economics do not include the cost of rebuilding, refurbishing or decommissioning Centerville Powerhouse, or for implementing any new license conditions, or resource management measures for a new license term. Proposed resource management measures and updated Project economics will be provided in the final license application (FLA). 3.0Purpose of Draft License Application 3.1 DLA Distributed To Meet FERC Requirements PG&E prepared this DLA for the Project in compliance with 18 C.F.R. § 5.16, which requires that no later than 150 days prior to the deadline for filing an Application for a New License, an applicant must file with FERC for comment a Preliminary Licensing Proposal or DLA. On April 18, 2007, PG&E notified FERC that PG&E elected to file a DLA. PG&E’s DLA conforms to the requirements at 18 CFR § 5.16(c). Section 5.16(e) provides that within 90 days of the filing date of the DLA, FERC staff and participants in the relicensing proceeding (Relicensing Participants) may file comments with FERC on the DLA. The comments may include recommendations regarding whether FERC should prepare an Environmental Assessment or Environmental Impact Statement. The comments may also include proposed modifications to studies included in the Study Plan Determination approved by FERC in September 2005. 3.2 DLA Distributed to Initiate Study Review During the DLA review period, PG&E plans to continue reviewing the study results with Relicensing Participants since many of the individual studies included in the Determination were delayed because of access issues and late 2006 spring runoff. At the time the DLA is filed, PG&E believes 22 of the 41 studies included in the Determination are complete, and major portions of four other studies are complete. PG&E expects the remaining 15 studies will be complete and included in the Updated Study Report that PG&E will file with FERC by September 6, 2007, pursuant to 18 CFR § 5.15(f). However, to facilitate use of the information from these studies, PG&E plans to make the information available to Relicensing Participants as soon as it becomes available. At this time, PG&E expects that some elements of individual studies will not be completed until after the FLA is filed. These study elements include: (1) full calibration of the Lower West Branch Feather River (WBFR) SNTEMP Water Temperature Model; and (2) development of a 2-dimensional Habitat Model for foothill yellow-legged frog (FYLF) on Lower WBFR. May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-3 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 3.2.1 Status of Studies September 2005 FERC-approved Study Plan Determination On August 17, 2005, FERC issued a Study Plan Determination that included 41 individual study plans. Since an agency with mandatory conditioning authority did not file a protest within 20 days of the Study Plan Determination in accordance with 18 CFR § 5.14, the Study Plan Determination was deemed approved by FERC on September 6, 2005 (Determination). Initial Study Report FERC’s Determination required PG&E to file an Initial Study Report (ISR) within one year of Determination (September 6, 2006). In late summer 2006, PG&E and Relicensing Participants realized that many studies began late due to access issues and a late spring 2006 runoff. Therefore, on September 1, 2006, PG&E requested that FERC permit PG&E to file a Supplemental Initial Study Report (SISR) in January 2007, with the expectation that substantial progress would be made on many studies by that time. FERC approved PG&E’s request on September 13, 2006. PG&E filed the ISR on September 6, 2006; held an ISR meeting on September 26, 2006; and filed the ISR meeting summary on October 10, 2006. PG&E filed its ISR, which essentially delayed review of studies under Section 5.15(c) until the SISR was filed. No comments were filed on the ISR meeting summary. Entrainment/Fish Passage Study Review In a letter dated March 22, 2007, FERC ordered that Study 6.3.3-6, Entrainment/Fish Passage, would be reviewed under Section 5.15(c) under the schedule outlined in FERC’s March 22 letter. In compliance with FERC’s letter, PG&E held a meeting to discuss the study on March 20, 2007 and filed a meeting summary on April 4, 2007. Relicensing Participants filed comments on the meeting summary on or before May 4, 2007. Licensee’s reply comments, if any, are due to FERC by June 4, 2007, and FERC’s final resolution of disagreements regarding the study is scheduled to occur by July 4, 2007. Supplemental Initial Study Report PG&E filed its SISR on January 16, 2007; held the SISR Meeting on January 30 and 31, 2007; and filed with FERC an SISR Meeting Summary on February 15, 2007. Six Relicensing Participants filed comments on the meeting summary as of March 19, 2007: Forest Service; USFWS; SWRCB; CDFG; FBC; and CSPA. PG&E filed reply comments with FERC on April 18, 2007. FERC is scheduled to resolve any disagreements by June 8, 2007. In its SISR, PG&E proposed that three studies included in the Determination be deleted and noted that a fourth study included in the Determination was a placeholder with a very low probability of implementation. None of the Relicensing Participants that filed comments on the SISR disagreed with PG&E. These 4 studies are: May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-4 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 Study 6.3.4-6, RT&E Forest Carnivores (deleted) Study 6.3.7-1, Visual Assessment (deleted) Study 6.3.11-1, Centerville Powerhouse (placeholder) Study 6.3.9-2, Socioeconomic Effects (deleted) PG&E also stated in its SISR that 11 of the 36 studies included in the Determination (41 initial studies minus the Entrainment/Fish Passage Study, 3 deleted studies, and 1 placeholder study) were “complete” at the time the SISR was filed. By complete, PG&E meant that for the purpose of describing the affected environment, PG&E has performed the study in substantial conformance with the FERC-approved study plan and provided the information to Relicensing Participants. The Forest Service in its March 15, 2007, filing agreed that 8 of the 11 studies listed by PG&E were complete in the SISR, but considered the other 3 studies incomplete. Since other Relicensing Participants that filed comments on the SISR did not include any substantive comment on the 8 studies, PG&E considers these studies completed for the SISR. The studies include: Study 6.3.3-7, Mollusk Study 6.3.4-1, Valley Elderberry Longhorn Beetle Study 6.3.4-4, Willow Flycatcher Study 6.3.4-5, Bats Study 6.3.4-7, Special Status Wildlife Study 6.3.5-2, Map Vegetation Study 6.3.5-3, Noxious Weeds Study 6.3.6-9, Recreation Flow DLA Study Review Of the remaining 28 studies (41 initial studies minus the Entrainment/Fish Passage Study, 3 deleted studies, 1 placeholder study, and 8 studies complete in the SISR), PG&E believes 10 are entirely complete in the DLA. These include: Study 6.3.1-2, Reservoir Spillway Study 6.3.1-3, Canal Spillway Study 6.3.3-1, Chinook Salmon Study 6.3.2-1, Hydrology Study 6.3.2-2, Operations Model Study 6.3.3-5, Benthic Macroinvertebrates Study 6.3.3-11, Canal Feeders Study 6.3.6-15, Recreation Facilities and Use Study 6.3.8-1, Archeological and Historic Properties Study 6.3.8-3, Historic Project Features Additionally, major portions of 4 more studies are complete in the DLA. These studies and the potions complete include: May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-5 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 Study 6.3.2-4, Water Temperature (CE-QUAL-W2 and Upper Butte Creek SNTEMP models complete) Study 6.3.2-5, Water Quality (2006 water quality monitoring complete, and PG&E proposes to sample water quality once in low flow summer 2007 conditions) Study 6.3.3-4, Fish Populations (study complete except for sampling 2 sites in late summer 2007) Study 6.3.3-3, Amphibians (VES complete) Updated Study Report PG&E expects that, with a few exceptions noted below, the remaining 14 studies will be completed by the time PG&E files the Updated Study Report (scheduled for September 6, 2007), and the FLA (scheduled for October 11, 2007). These studies and the remaining work for each include: Study 6.3.1-1, Project Roads (late spring 2007 site visit and follow-up) Study 6.3.3-4, Water Conveyance Risk Assessment (late spring 2007 site visit and follow-up) Study 6.3.3-2, Lower Butte Instream Flow (hydraulic and habitat modeling) Study 6.3.3-8, Upper Butte Instream Flow (hydraulic and habitat modeling) Study 6.3.3-9, Lower WBFR Instream Flow (habitat modeling) Study 6.3.3-10, Upper WBFR Instream Flow (data collection, and hydraulic and habitat modeling) Study 6.3.4-2a, Falcon and Osprey (spring 2007 survey) 6.3.4-2b, Bald Eagle (spring 2007 survey) Study 6.3.5-1, RT&E Plants (spring 2007 survey) Study 6.3.6-12, Recreation Needs (awaiting completion of Recreation Visitor Use Study to complete study) Study 6.3.6-13, Recreation Demand (awaiting completion of Recreation Visitor Use Study to complete study ) Study 6.3.6-14, Recreation Visitor Use (complete survey in spring 2007) Study 6.3.6-16, Recreation Carrying Capacity/Suitability (awaiting results of Recreation Visitor Use Survey to complete study) Study 6.3.8-2, Traditional Cultural Properties (complete Tribal consultation) Post Final License Application Filing PG&E anticipates that portions of two studies will not be complete until after the FLA is filed because fieldwork will extend into late 2007. The specific work includes: Lower WBFR SNTEMP Water Temperature Model – The Lower WBFR SNTEMP Model is developed and included in the DLA to PG&E’s satisfaction. However, at the request of some Relicensing Participants, PG&E has agreed to monitor water temperature in Lower WBFR through summer 2007, and re-calibrate the model using these data. PG&E expects the May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-6 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 revised model will be available by February 2008. The Lower WBFR SNTEMP Model is part of Study 6.3.2-4, Water Temperature. Lower WBFR FYLF 2D Modeling – A FYLF 2D Model is included in Study 6.3-3, Amphibians, if Relicensing Participants agree on FYLF Habitat Suitability Criteria (HSC). If it proceeds, fieldwork would occur in late 2007. PG&E expects a report would not be available until February 2008. 3.3 DLA Distributed to Continue Consultation Regarding Potential Resource Management Measures Since study results of many of the studies included in the Determination have not been reviewed by Relicensing Participants, PG&E plans to continue consultation with Relicensing Participants regarding potential resource management measures after the DLA is filed. To this end, PG&E, with the concurrence of Relicensing Participants, has included in the DLA a “List of Discussion Measures”, which consists of “strawman” resource management measures PG&E believes may be useful in stimulating discussion and developing measures with Relicensing Participants prior to filing Licensee’s FLA. Inclusion of these measures should not be inferred to constitute a proposal by PG&E or Relicensing Participants. The “List of Discussion Measures” is a tool to facilitate discussion with participants in the relicensing proceeding. On April 11 and 18, 2007, PG&E, resource agencies and other Relicensing Participants agreed they would continue to consult regarding resource management measures after the DLA is filed. Specifically, Relicensing Participants agreed PG&E would include in the DLA the “List of Discussion Measures” and additional measures that were identified at the April 11 and 18, 2007, Relicensing Participants meetings. Relicensing Participants would strive to reach agreement on as many measures as possible for inclusion in the FLA. Relicensing Participants plan to meet to continue consultation on at least the following dates: May 22 and 23, 2007 June 19 and 20, 2007 July 24 and 25, 2007 August 21 and 22, 2007 September 18, 19 and 20, 2007 4.0Summary of Draft License Application Since Relicensing Participants have not reviewed all of the study results and are still discussing potential resource management measures, portions of the DLA are not complete. The most notable sections are: (1) Exhibit B – Since Relicensing Participants have not completed discussion regarding flow measures, Exhibit B describes Project operations under “Base Case” conditions; that is, if the Project continued to operate as it is operated today; (2) Exhibit D - since Relicensing Participants have not completed discussion regarding resource management measures, Exhibit D describes Project economics only in terms of the existing Project; (3) Exhibit E, Affected Environment – as described above, some studies are not complete; (4) May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-7 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 Exhibit E, Impact Assessment and Licensee Proposed Resource Management Measures – as described above, Licensee has included a “List of Discussion Measures” and assessments to stimulate discussion and collaboratively develop recommended resource management measures after the DLA is filed. 4.1 DLA Organization The DLA is composed of two volumes. Each volume contains: (1) a table of contents including a list of tables and figures for that volume; and (2) a glossary of terms, abbreviations and acronyms that are used frequently in the DLA. Volume I contains: (1) this Executive Summary; (2) an Initial Statement; (3) Exhibit A - a Project description; (4) Exhibit B - a description of Project operations and resource utilization; (5) Exhibit C - a description of proposed construction; (6) Exhibit D - a statement of cost and financing; (7) Exhibit F - a list of design drawings; (8) Exhibit G - Project maps; and (9) Exhibit H – miscellaneous information to be provided by an applicant for a new license. Volume 2 contains Exhibit E, the Environment Report. Exhibit E includes: (1) an introduction; (2) a general description of the river basins; (3) a description of cumulative effects consistent with FERC’s Scoping Document 2; (4) a description major applicable laws and the actions PG&E has taken or intends to take to comply with those laws; (5) a brief summary of the Project; (6) a description of the potentially affected environment by resources area. This section includes the results of PG&E’s relicensing studies to date; (7) a list of “Discussion Measures”; (8) a list of unavoidable impacts, which is a placeholder in the DLA since resource management measures have not been developed; (9) an economic analysis, which is also a placeholder in the DLA; (10) a description of the Project’s consistency with qualifying comprehensive plans; (11) consultation documentation, which is a placeholder and will include a summary of comments on the DLA and PG&E’s reply in the FLA; and (12) a list of cited literature. As agreed to by Relicensing Participants and FERC staff at the April 11, 2007 meeting, the DLA does not include oversized (11 in. by 17 in.) maps or appendices that were included in the SISR filed on January 15, 2007, unless the map or appendix has been modified. All material will be included in the FLA. 4.1.1 Summary of DLA Major Sections Initial Statement PG&E is the owner, operator and holder of the existing FERC license for the Project, which expires on October 11, 2009. On October 4, 2004, PG&E filed with FERC its Notice of Intent (NOI) to file a final license application by October 11, 2007, for a new license to continue to operate the Project. The Initial Statement includes a list of agencies, political organizations, and Indian tribes that may be interested in the relicensing. May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-8 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 Exhibit A – Project Description Exhibit A provides a detailed description of the Project, a discussion of the proposed Project facilities, and identifies lands of the United States that are occupied by the Project. The Project generally consists of three small reservoirs (Round Valley, Philbrook, and DeSabla Forebay), several small diversion and feeder dams, canals (with tunnels and flumes), penstocks and three powerhouses: Toadtown, DeSabla, and Centerville. PG&E does not propose to add capacity or make any major modifications to the Project or its operation at this time. However, pending further evaluation, the Licensee expects that Centerville Powerhouse will likely need to be rebuilt, refurbished or decommissioned during the next license term. The total area within the FERC Project Boundary is 700.6 acres. Approximately 159.4 acres of land are owned by the United States (96.26 of these acres are subject to PG&E rights under the Act of July 26, 1866). Of the federal lands, 145.7 acres are within the Lassen National Forest, 2.1 acres are within the Plumas National Forest and 11.6 acres are administered by the Bureau of Land Management. Exhibit B – Project Operations and Resource Utilization As described earlier, PG&E and Relicensing Participants intend to develop detailed flow-related proposed resource management measures for inclusion in the FLA. To provide useful information to Relicensing Participants, and with agreement of Relicensing Participants, Exhibit B in the DLA describes “Base Case” operations; that is, how the Project would be operated in the future if no changes were made to the current FERC license or without changes or modifications to Project facilities. Exhibit B in the FLA will take into account PG&E’s proposed resource management measures which will be developed with input from Relicensing Participants and changes or modifications needed to Centerville Powerhouse. It is also important to recognize that the “Base Case” operation describes recent, not historic, Project operations. PG&E is the designated non-Federal representative in informal consultation with NOAA Fisheries under the ESA. Since 1999, PG&E has prepared annual Project Operations and Maintenance Plans in consultation with CDFG, NOAA Fisheries, and USFWS for the purpose of maximizing the cool water benefits the Project provides spring-run Chinook salmon in Butte Creek during the summer months. Exhibit C – Proposed Construction PG&E does not propose to add capacity or make any major modifications to the Project or its operation at this time. However, pending further evaluation, the Licensee expects that Centerville Powerhouse will likely need to be rebuilt, refurbished or decommissioned during the next license term. The construction schedule for any new environmental and recreational facilities and for removal of unneeded facilities in the current license will be included in Exhibit E of the FLA. May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-9 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 Exhibit D – Statement of Costs and Financing Exhibit D provides a statement of DeSabla-Centerville Project costs and financing. It also includes a statement of the estimated annual value of Project power. Exhibit D describes the FERC “No Action Case” and does not include the cost of rebuilding, refurbishing or decommissioning Centerville Powerhouse, implementating new license conditions, or potential resource management measures under terms of a new license. If included, these costs may cause the overall Project economics to become marginal. In summary, the net book value of the Project as of May 2007 is estimated to be $31.4 million. The Licensee's estimated total cost of obtaining a new license, not including implementing new license conditions, is about $14.5 million. The average annual cost of the total Project in 2007 dollars using FERC’s current cost method and no new license conditions is estimated to be about $8,944,000 per year. Future capital additions are estimated to average an additional $816,000/yr but does not include rebuilding, refurbishing or decommissioning Centerville Powerhouse. The annual FERC fee is about $120,000/yr. Property taxes for the Project for 2006 totaled about $1,090,000 and the Licensee paid about $828,000 in Project-related income taxes in 2006. For the Project, the 2006 Baseload Market Price Referent (MPR) of 8.317 cents per kWh adopted by the California Public Utilities Commission in April 2006 will be deemed the current replacement energy cost. Exhibit H has an additional discussion of how the value of Project power was determined. Exhibit E – Environmental Report The Project is located in northern California in the Butte Creek and WBFR drainages. Both drainages are located in Butte County along the western slope of the Sierra Nevada and Cascade Range geomorphic provinces. The Project complies with all major applicable laws, and is consistent with qualifying comprehensive plans, with the exception of turbidity as described below under Water Resources. In Scoping Document 2, FERC identified water quality, water temperature and fish as resources potentially subject to cumulative effects. Provided below is a brief summary of the affected environment by resource area. To the extent appropriate, each summary includes information from PG&E’s Relicensing studies. Geology and Soils – Overall, the roads within the Project Boundary are in good condition. With the exception of a few localized problems, roads are generally stable and do not pose significant catastrophic erosion concerns. Observation of the WBFR indicates that it has not been adversely affected by sediment input from erosion at the Round Valley Spillway. The rock underlying the spillway channel is relatively hard and indurated, and resistant to erosion. Some alluvial debris has accumulated at the mouth of the spillway discharge channel north of its confluence with the WBFR. It is likely that other materials eroded from the channel over the past 130 years have been carried away down the WBFR. The erosion rate of the Round Valley Spillway channel is estimated to be relatively low (about 1 foot of vertical incision every 22 years and limited lateral migration). Half of the 24 canal spillway channels have a low amount of sediment available and low risk of sediment being added to either the receiving stream or mainstem of the stream. Five May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-10 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 of the 24 canal spillway channels have moderate sediment availability due to the channels having discontinuous erodible sections, with possible or intermittent transport of sediment to an active stream. Seven spillway channels are actively eroding. Of these seven, two have a large amount of sediment potentially available to an active stream because of direct erosive action by the spilling, and the other five have sediment available because they were created in drainages that had either unstable and erosive parent material or other actions in the basin initiated erosion (e.g., not directly related to spillway use but spillway use may have exacerbated the problem). On average, 12 potential geologic hazards per mile were found along the 36.5 miles of Project water conveyance facilities. Nearly half of the length of Butte Canal and the Lower Centerville Canal was considered Moderate or higher risk (49% and 48%, respectively). In comparison, 14 percent of the Hendricks Canal was considered to have a Moderate or higher risk. Both the Upper Centerville and Toadtown canals received comparable but considerably lower overall risk assignments (<1%). Water Resources- Three of the Relicensing studies provided information or models to assist Relicensing Participants in developing potential resource management measures. The Hydrology Study collated existing regulated stream flow and reservoir elevation information, synthesized unimpaired hydrology, and compared regulated and synthesized stream flow data using Indicator of Hydrologic Alteration (IHA) statistics. The Operations Model Study resulted in the development of a HEC ResSim water balance computer model that includes all Project facilities. The Water Temperature Study monitored water temperature throughout the Project Area, and resulting data were used to develop three water temperature computer models: (1) a CE-QUAL-W2 water temperature model that extends from and includes Philbrook and Round Valley reservoirs, the upper WBFR, Hendricks/Toadtown Canals, DeSabla Forebay, and lower Butte Creek from DeSabla Powerhouse to just below Centerville Powerhouse; and (2) two SNTEMP water temperature models, one of upper Butte Creek from Butte Head Dam to Forks of the Butte and the other of lower WBFR from Hendricks Head Dam to the Miocene impoundment. These studies are complete and their results are included in the DLA, with the exception that PG&E, at the request of some Relicensing Participants, has agreed to collect water temperature data on the lower WBFR in 2007 to provide additional validation for the lower WBFR SNTEMP model. The fourth study (Water Quality) monitored water quality throughout the Project Area in spring, summer and fall 2006 as well as over the Independence Day and Labor Day holiday periods. Based on this study and historic information, PG&E considers water quality to be in accordance with the Basin Plan with the exception of high bacteria in DeSabla Forebay, which Licensee believes is related to dense waterfowl populations, and short durations of elevated turbidity. PG&E proposes to modify the FERC-approved Water Quality study plan to eliminate duplicating 2006 sampling in 2007, with the exception of the summertime sampling. Fish and Aquatic Resources – Foothill yellow-legged frogs (FYLF) were observed in various life stages and were well distributed throughout the study area, which included National Forest System Land (NFSL) from Philbrook Reservoir to Miocene Diversion Dam on the WBFR. As described above, if reliable FYLF Habitat Suitability Criteria (HSC) is developed, PG&E will perform a 2-dimensional flow/habitat model for FYLF on NFSL in the WBFR. The study would occur in late 2007. May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-11 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 Since 1999, PG&E has consulted with CDFG, NOAA Fisheries, and USFWS to develop annual Project Operations and Maintenance Plans for the purpose of maximizing the cool water benefits the Project provides to spring-run Chinook salmon in lower Butte Creek during summer months. PG&E's and CDFG's ongoing sampling in lower Butte Creek demonstrated the benefit of this operations, with both Chinook salmon and steelhead found in lower Butte Creek. PG&E's sampling at seven sites from Lower Centerville Diversion Dam to Honey Run Covered Bridge documented these anadromous fishes as well as transitional zone species (e.g., hardhead, Sacramento pikeminnow, Sacramento sucker, California roach, tule perch, and sculpin species). Upstream of Lower Centerville Diversion Dam, PG&E found rainbow and brown trout at the four sites sampled. Fish species composition in the WBFR from Round Valley Reservoir to the Miocene Diversion impoundment (7 sites) was similar to that found in Butte Creek with the exceptions that brook trout were found in the uppermost elevations and anadromous fish were not found. Rainbow and brown trout were found throughout the WBFR, with transitional zone species found 1-2 miles upstream of the Miocene Diversion impoundment. Sampling a one site in Philbrook Creek below Philbrook Dam found rainbow and brown trout. Fish population, size class distribution, condition factor and other statistics , including for fish sampling in canal feeders and Coon Hollow Creek, are provided. Overall benthic macroinvertebrate (BMI) sampling suggested some Project effect on BMI assemblages downstream of Philbrook and Round Valley reservoirs, but little effect associated with Project diversions. A small response was documented downstream of Project diversions for one sensitive metric (EPT Taxa), while several integrated metrics representing multiple characteristics of the BMI assemblage indicated no significant response. Project canals contain fish of the same species and age distribution as contributing streams. PG&E has recorded the species, number, and size of the fish during fish rescue operations performed prior to annual canal outages. Systematic differences in fish abundance in streams above and below Project diversions are not apparent. Special-status mollusks were not found during Relicensing studies. PG&E expects to complete instream flow studies in the Upper and Lower Butte Creek and WBFR by mid 2007. Wildlife - Willow flycatcher was not detected in the Project Area. Bat surveys found one bat roost site (Centerville Powerhouse), and of the five bat species identified, only one (western red bat) is a special-status species (CSC). Using the California Wildlife Habitat Relationships (CWHR), PG&E found potentially suitable habitat for 57 special-status wildlife species: 2 reptiles, 45 birds, and 10 mammals. The DLA includes the location of the suitable habitat by species and an assessment of the potential for occurrence for each species. PG&E found active osprey nests along Butte Creek near Butte Siphon and on the north shore of Philbrook Reservoir, but no active peregrine falcon nests. Potential peregrine falcon nesting cliffs were identified along lower Butte Creek. PG&E plans to perform an additional survey for osprey and peregrine falcon in late spring 2007. May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-12 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 Botanical Resources - One of the botanical studies mapped over 6,780 acres in the Project Area and roads used by Licensee for Project purposes, of which about 40 percent was a single vegetation type: Douglas-fir–Ponderosa Pine. Nine noxious weeds, the more common of which were Spanish and French broom, were found in the Project Area. Other noxious weeds were black locust, common fig, English ivy, Johnsongrass, periwinkle, tocalote, and tree-of-heaven. Noxious weeds were most commonly associated with linear rights-of-way and roads. Ten special-status plants were found: (1) Ahart’s sulfur-flower; (2) Butte County calycadenia; (3) Butte County morning glory; (4) cut-leaved ragwort; (5) Humboldt lily; (6) Jepson’s onion; (7) Sanborn’s onion; (8) shield-bracted monkeyflower; (9) tall checkerbloom; and (10) white- stemmed clarkia. PG&E plans to perform additional surveys for special-status plants in spring 2007. Wetlands, Riparian and Littoral Habitat – Riparian vegetation occurs primarily along the WBFR and upper Butte Creek, with minor wetlands adjacent to the Project reservoirs. Vegetation mapping performed as part of the botanical studies included the Project Area and roads used by Licensee for Project purposes, and identified two wetland types, Freshwater Emergent Wetlands and Montane Wetland Shrub, which together represented less than 1 percent of the area mapped. Species Protected under the ESA – Four species protected under the federal Endangered Species Act (ESA) are potentially-affected by the Project: bald eagle, valley elderberry longhorn beetle (VELB), and spring-run Chinook salmon and steelhead. Nesting bald eagles and VELB were not found in the Project Area. Nineteen elderberry plants, the host plant for VELB, were found in lower elevations but no indications of VELB were observed. During the summer and fall, the Project is operated primarily to support and enhance a naturally-reproducing population of spring-run Chinook salmon found in lower Butte Creek. PG&E operates the Project in accordance with a preliminary Biological Opinion issued in November 2006 by NOAA Fisheries Service. FERC has designated PG&E as the non-federal representative for informal consultation under Section 7 of the ESA. PG&E plans to perform an additional survey for bald eagles in late spring 2007. Recreation - The Project’s primary recreation resources, which include recreation sites, recreation facilities, and recreation activity opportunities, are focused around Philbrook Reservoir (Philbrook Angler Access, Philbrook Campground, and the Philbrook Picnic and Camping Overflow Area) and DeSabla Forebay (3 general recreation areas). The Lassen National Forest (LNF) also operates the Willows Area on Philbrook Creek about 0.5 mile east of Philbrook Reservoir, and the reservoir is the setting for 42 summer homes that lie outside of the Project Boundary on lands owned by PG&E. Limited dispersed recreation occurs around Round Valley Reservoir, and Project canals provide hiking and equestrian opportunities. Project recreation facilities at Philbrook Reservoir are generally in good condition, however, most are not universally accessible according to current standards. PG&E’s recreation flow study indicates that the Project, as currently operated for the protection and enhancement of spring-run Chinook salmon, has little potential to provide boating flow releases. However, boaters did identify an interest for improved access and flow information. The Visitor and Resident Use Survey was completed in late April 2007. PG&E is analyzing the study results to determine May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-13 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 whether existing facilities are expected to meet demand now and during the term of the new license. PG&E will incorporate the use information into other recreation studies (e.g., Carrying Capacity, Demand and Needs), which will be completed in summer 2007. Land Use - Lands within the upper portion of the Project Area are primarily owned by Sierra Pacific Industries (SPI) and the federal government, which are administered by Lassen National Forest. Some State, PG&E, and other private ownership also occurs within the upper Project Area. Primary land owners in the lower Project Area include SPI, PG&E, other private owners, and the federal government, which lands are managed by the Plumas National Forest (PNF) along the WBFR, and the Bureau of Land Management along Butte Creek. Some State ownership also occurs in the lower Project Area. Primary land uses in the Project Area include Project operation and maintenance, timber harvesting, a variety of outdoor recreation activities, wildlife and resource management, and residential uses. Aesthetics - The scenic landscape along the WBFR is characterized by steep wall canyons, covered with a conifer forest, with some variations in landforms. Roads, residences, and other man-made developments are infrequent. While a few roads(e.g., the Humbug Summit Road and the USFS West Branch Campground and Retson Road) along the ridge tops provide views into the WBFR canyon, these views are limited by the intervening rugged terrain and steep canyon walls. Similarly, the upper portion of Upper Butte Creek runs through a deep, narrow incised canyon that is inaccessible for much of its length. The canyon supports a dense vegetation cover ranging from riparian vegetation along Butte Creek at the bottom of the canyon, to foothill woodland along the canyon walls. The steep sloped canyon has limited developments and is typically reached via unimproved roads. The grade diminishes in lower Butte creek downstream of Centerville Powerhouse, which is the most heavily settled portion of the watershed. This area is distinctive for canyon views from both the canyon bottom and rim. Unique vistas are significant attractions to the area, particularly the sloping canyon walls capped by cliffs and bluffs for which the county was named. In addition, the riparian stream corridor is attractive for its varied vegetation and water features. There are views of the river, as it flows through the canyon bottom near Parrott-Phelan Diversion Dam from Honey Run Road and Humbug Road, as well as from the south rim of the Skyway. Along the north rim, however, views are limited due to inaccessibility. CulturalResources and Tribal Interests – PG&E is the designated non-federal representative under Section 106 of the National Historic Preservation Act for informal consultation. Consultation is ongoing with the Forest Service, BLM, the Mechoopda Indian Tribe of Chico Rancheria, the Greenville Rancheria, and SHPO. A total of 46 archeological and historic era sites were identified. Of the 46 archeological and historic era sites, 34 sites contain only historic-era cultural remains, 4 sites were prehistoric cultural sites and contain only prehistoric cultural remains, and 8 sites contain a combination of both historic-era cultural remains and pre- historic cultural remains. Of the 34 historic-era cultural sites, 5 were evaluated as eligible, 2 require further studies before an evaluation can be made, and the remaining 27 siteswere recommended ineligible for listing on the NRHP. May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-14 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 Until formal evaluation is undertaken, all prehistoric sites are considered potentially eligible for listing on the NRHP. The historic Project features assessment indicates that the Project may be eligible for the NRHP as a historic district. Socioeconomic – The Project is located within Butte County. The nearest major population center is Chico. FERC’s Determination included one socioeconomic study, which would be implemented if significant changes that could measurably affect local socioeconomic conditions were proposed by PG&E. At this time, PG&E has not proposed such changes. As described above, since results of many studies included in the Determination have not been reviewed by Relicensing Participants, PG&E with the concurrence of Relicensing Participants, has included in Exhibit E a table that includes a “List of Discussion Measures” and an assessment of potential issues. PG&E has included this table to stimulate discussion and development of potential resource management measures with Relicensing Participants. PG&E has also included in the DLA additional potential resource management measures identified by Relicensing Participants during April 11 and 18, 2007 meetings. Inclusion of these measures should not be inferred to constitute a proposal by PG&E or Relicensing Participants. Exhibit E includes three placeholder sections that will be completed in the FLA. These are: Section 8, Unavoidable Adverse Impacts, which will be determined following development of resource management measures; Section 9, Economic Analysis, which will be determined following development of resource management measures; and Section 11, Consultation Documentation, which in the FLA will describe the relicensing process including development of resource management measures. Exhibit F – Design Drawings PG&E has developed 12 design drawings that show plan, profile, elevation and sections for each Project structure or major piece of equipment. In light of heightened national security concerns and in conformance with FERC’s Critical Energy Infrastructure Information (CEII) regulations, PG&E will file Exhibit F design drawings under separate cover and requests they receive privileged treatment under FERC’s regulations at 18 CFR § 388.112. In response to a recent request by FERC, PG&E is in the process of evaluating stabilization alternatives for the Philbrook Reservoir spill channel. None of the alternatives add storage capacity. PG&E is consulting with FERC and appropriate agencies regarding this modification, and expects to substantially complete modification to Philbrook Reservoir spill channel by the time a new license is issued. PG&E will file with FERC revised Exhibit F drawings when the modification is complete. Exhibit G – Project Maps Exhibit G provides Project maps that show the location of all Project facilities and features, the FERC Project Boundary around each facility and feature, and federal and non-federal lands May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-15 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 within the Project Boundary. In accordance with FERC guidelines, Exhibit G maps are considered privileged, non-internet public (NIP) and will not be made available on the Internet. Exhibit H – Miscellaneous Filing Material Exhibit H provides miscellaneous filing information for various subject items. Principal among these are: (1) a discussion of the coordination of Project operation with other water and electrical systems, (2) a discussion of the need for the electricity generated by the Project, (3) data showing the annual cost of power produced by the Project and alternative sources and cost of alternative power, (4) a statement of measures taken or planned to ensure safe management, operation, and maintenance of the Project, and (5) a discussion of Licensee’s record of compliance with the terms and conditions of the existing license. The Project is operated on a base-loaded basis and in conjunction with the Licensee's other electrical resources to minimize the overall cost of energy production. During normal and low flow conditions, the Project is operated to utilize the water available for power production. During high flow periods, such as during spring snow melt, the Project operates at or near maximum capacity to minimize spills. In 1999, Central Valley (CV) spring-run Chinook salmon were designated as a threatened species under the Endangered Species Act (ESA). Since that time, Licensee has operated the Project under an annual Project Operations and Maintenance Plan developed each spring in consultation with the California Department of Fish and Game (CDFG), National Marine Fisheries Service (NOAA Fisheries), and U. S. Fish and Wildlife Service (FWS). This Operations and Maintenance Plan outlines the procedures and practices followed by PG&E in the operation and maintenance of the Project facilities to enhance and protect this habitat for spring-run Chinook salmon. This Operations and Maintenance Plan is also intended to provide the basis for modification of the reservoir temperature release criteria established in the FERC’s August 21, 1997 order, as amended by its August 20, 1998 order. Under the Project Operations and Maintenance Plans, water is released from reservoirs on the WBFR, first from Round Valley Reservoir, followed by the release of water from Philbrook Reservoir as high temperatures occur during the summer. These releases, together with the diversion of natural flow from the WBFR, provide an additional source of cool water to Butte Creek. To minimize the amount of solar heating that may occur as the water travels from the WBFR to Butte Creek, the Project Operations and Maintenance Plans has an objective to maintain a minimum flow of 100 cfs into the DeSabla Forebay through mid-September, if possible. This measure decreases the time required for conveyance through the DeSabla Forebay. Conservation measures incorporated into Project operations are set forth in detail in the 2006 Project Operations and Maintenance Plan. The base-loaded operation of the Project helps to minimize the operation of non-renewable, higher cost thermal electric generating plants. During the spring, fall and winter months, the daily California demand for electricity can vary from a low of about 30,000 MW up to about May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-16 Pacific Gas and Electric Company DeSabla-CentervilleProject FERC Project No. 803 42,000 MW. However, in the summer months, in particular during heat storms, the daily demand for electricity can jump to above 54,000 MW. The alternative sources of power currently available to PG&E are increased purchases and new generation developments. However, the Project is considered a “renewable” small hydroelectric 1 facility under State law. Accordingly, the Project falls within the State’s Renewable Portfolio Standards (RPS), which require that an electrical corporation must increase its total procurement of eligible renewable energy resources by at least an additional 1% of retail sales per year so that 20% of its retail sales are procured from eligible renewable energy resources no later than December 31, 2010. Thus, any reduction in the Project’s power production would need to be replaced with another source of renewable electrical energy. In the short and long term, the need for Project power is based on the fact that the Project is an air emission-free, RPS-eligible renewable energy resource, which contributes to system reliability and a diversified generation mix. If the electric generating capacity of the Project were replaced with fossil-fueled resources, green house gas emissions could potentially increase 2 by about 13,000 metric tons of carbon per year. If the Licensee is not granted a new license, the amount of purchased power would increase. An estimate of the replacement power costs under the “no action” case is about $12.95 million per year. The average annual cost of Project power under the no-action case is 5.7 cents per kWh. Licensee implements numerous measures to ensure safe management, operation, and maintenance of the Project. Licensee has a good record of compliance with the terms and conditions of the current license. A review of Licensee’s records indicates consistent compliance with all of the license articles. 1 SeeCalifornia Public Utilities Code § 399.12(a)(3). 2 Source of conversion factor 85 kilograms of carbon emissions per mega-watt-hour: FERC Draft Environmental Impact Statement – Upper North Fork Feather River Project, Project No. 2105 dated September 2004. May 2007 Draft License Application Executive Summary ©2007, Pacific Gas and Electric Company Page ES-17