CPUC Rejects PG&E’s Proposal to Transfer Hydroelectric Assets to New Subsidiary

Published 5/28/2024  |  South Yuba River Citizens League

We have some important news to share regarding Pacific Gas & Electric’s (PG&E) recent proposal to transfer its hydroelectric assets to a new subsidiary, Pacific Generation (PacGen). The California Public Utilities Commission (CPUC) has rejected this proposal.

Background

As many of you may know, PG&E owns a significant portfolio of hydroelectric projects and assets including the Drum Spaulding project on the Yuba River. This project includes 24 dams and reservoirs and 7 powerhouses including the Spaulding Powerhouse 1 that is in emergency repairs after an infrastructure failure in March.

PG&E proposed to transfer all these hydro assets to PacGen, a new company that PG&E would own 51% of. This would have been the biggest and first-ever transfer of hydropower assets in California.

CPUC’s Decision

On May 9, 2024, the CPUC rejected PG&E’s proposal. They found that PG&E failed to show that the proposed transaction meets even the minimal public interest standard. The CPUC stated that the proposed transaction would result in additional costs, which would contribute to rate increases, with no evidence of offsetting rate savings. It was also unclear how the transaction would affect PG&E’s credit rating and whether the CPUC would have jurisdiction over PacGen. The CPUC expressed concerns about decreased legal accountability for PG&E’s safe and reliable operation of the generating hydro assets.

SYRCL’s Stance

Since 2013, SYRCL has been an active participant in intervening and negotiating PG&E’s license for the Drum Spaulding hydroelectric project. Many of these projects were built and licensed before the advent of our modern environmental laws and the conditions in the license reflect this, with inadequate flows for the survival of fish and recreation.

Our aim in the relicensing of this project is to ensure that new license conditions give equal consideration to power generation, water supply, protection of fish and wildlife, public benefit, protection of recreation opportunities, cultural resources, and monitoring of the impact of the project on our natural resources. SYRCL was concerned about the potential transfer of PG&E’s hydroelectric assets, as it could complicate questions of liability for dam safety and obligations under the Endangered Species Act. The transfer could potentially dilute accountability, making it more difficult to ensure that the new license conditions are adhered to, particularly those related to environmental protection and public benefit.

We believe that the proposed transfer would have benefited PG&E shareholders at the expense of California ratepayers, the Yuba River, dam safety, and the public interest. We are pleased that the CPUC has rejected this proposal. 

Moving Forward

We will continue to monitor this proposal and advocate for the best interests of the Yuba River and our community. We thank you for your continued support and engagement in these important issues!

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This post originally appeared on SYRCL.