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NEVADA CITY, Calif. August 29, 2019 – NID’s Assistant Manager Greg Jones cites PG&E’s bankruptcy proceedings and the resulting revenue uncertainty as the rationale behind yesterday’s announce that the irrigation district is halting all real estate fee acquisitions.
Responding to a request for comment on yesterday’s story, NID suspends all real estate acquisitions, effective immediately, Jones stated that power purchase agreements (PPA) between NID and PG&E are now part of the “convoluted bankruptcy proceedings.”
NID’s Hydro Division, which has a generation capacity of 82.2 megawatts, sells the power to PG&E via the PPA. In 2019, the projected revenue is $20,124,690, with $10,940,000 being transferred to supplement water rate revenues.
Jones said the past practice of bringing possible real estate purchases to the Board is contingent on available funding and, at this time, the district is exercising fiscal responsibility by suspending all acquisitions.
Centennial is on the back burner, Centennial still has a 2019 budget
Pressed on implications for the proposed Centennial dam, Jones demurred, “Centennial is on the back burner and Centennial has a 2019 budget. Both these statements are true.” Property acquisitions in the Bear River canyon with an eye towards building the dam and reservoir have sparked opposition from many groups and individuals.
Ramifications for other NID projects
Halting fee acquisitions aka buying properties affects ongoing projects. Jones mentioned the new trail along Scotts Flat dam, saying “Until we’ve done our due diligence, completed CEQA and all other required studies, we can’t go before the Board and ask for an authorization to buy a small portion of land from a private owner.” He clarified it was about an acre of land needed to complete the trail on the opposite side of NID’s Scotts Flat property.
Easements, a frequent means for NID to have access to their canals or pipelines, are not affected by the moratorium.
PG&E bankruptcy proceedings fallout – continued
Other projects, like the possible purchase from PG&E of the Spaulding-Drum project in conjunction with Placer County Water Agency (PCWA) are also tied up in the lengthy Chapter 11 case.
PG&E filed for reorganization under Chapter 11 on January 29, 2019 and promised to file an exit plan by September 9th. This is the second time PG&E has filed for bankruptcy, their 2001 filing resulted in $10.2 billion paid to creditors and an estimated $40 billion cost to the corporation and the state of California after a three year plan.
Electricity sales to PG&E via the PPA are embroiled in the current case. Theoretically, PG&E could attempt to either renegotiate the rates paid for the hydro power generated by NID or drop the contracts altogether. Jones declined to comment on any contingency plans NID might have if this was to materialize. The district has the option to sell electricity on the open market.