Attachment_4-Battle_Creek_Hydroelectric_Project_Alternatives_Evaluation_Report.pdf

Sacra m ento River

North Fork Battl e

Cr ee k

Battle Creek

South Fork Battle Creek

Battle Creek Hydroelectric Project Alternatives Evaluation Report

AUGUST 2019

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BATTLE CREEK HYDROELECTRIC PROJECT

ALTERNATIVES EVALUATION REPORT

P R E P A R E D F O R :

National Marine Fisheries Service

United States Bureau of Reclamation

United States Fish and Wildlife Service

California Department of Fish and Wildlife

California State Water Resources Control Board

W I T H F U N D I N G P R O V I D E D B Y :

Metropolitan Water District of Southern California

August 2019

Battle Creek Hydroelectric Project i

Contents

Page

List of Tables ................................................................................................................................................ iii

List of Figures ............................................................................................................................................... iv

Acronyms and Abbreviations ........................................................................................................................ v

Executive Summary ....................................................................................................................... ES-1

Purpose of the Report ....................................................................................................................... ES-1

Summary of Alternatives Reviewed .................................................................................................. ES-2

Summary of Other Key Considerations ............................................................................................. ES-5

Summary of Key Findings .................................................................................................................. ES-5

Chapter 1 Background ..................................................................................................................... 1-1

Battle Creek Hydroelectric Project ...................................................................................................... 1-1

Battle Creek Salmon and Steelhead Restoration Project .................................................................... 1-1

Phase 1A ........................................................................................................................................ 1-3

Phase 1B ........................................................................................................................................ 1-3

Phase 2 .......................................................................................................................................... 1-4

Restoration Project Cost Sharing (Anticipated vs. Actual) .................................................................. 1-4

Chapter 2 Key Considerations .......................................................................................................... 2-1

Future Hydroelectric Project Ownership ............................................................................................. 2-1

Decommissioning Costs ....................................................................................................................... 2-2

Non-Construction Costs....................................................................................................................... 2-2

Depreciation and Amortization of Capital Costs ................................................................................. 2-3

Financing Costs .................................................................................................................................... 2-3

Legal and Professional Costs ............................................................................................................... 2-3

FERC Relicensing .................................................................................................................................. 2-3

MOU Obligations ................................................................................................................................. 2-4

Economic Viability of Future Hydroelectric Project ............................................................................ 2-4

California Energy Conditions ............................................................................................................... 2-5

PG&E Bankruptcy ................................................................................................................................ 2-5

Consequences of Hydroelectric Project Modifications or Decommissioning to Coleman

National Fish Hatchery Operations ..................................................................................................... 2-6

Other Key Considerations Not Addressed in this Report .................................................................... 2-8

Chapter 3 Analysis of Alternatives ................................................................................................... 3-1

Alternatives 1 and 2: Full Decommissioning of Battle Creek Hydroelectric Project ........................... 3-5

Alternative 3: Existing Conditions (2019) ............................................................................................ 3-7 ii

Alternative 4: Restoration Project ....................................................................................................... 3-9

Alternative 5: Restoration Project without Inskip Powerhouse and Inskip Diversion Dam .............. 3-11

Alternative 6: Volta Diversions Only.................................................................................................. 3-13

Alternative 7: Volta and North Battle Creek Feeder Diversions Only ............................................... 3-15

Alternative 8: Volta and Eagle Canyon Diversions Only .................................................................... 3-17

Alternative 9: Eagle Canyon Diversion Only ...................................................................................... 3-19

Alternative 10: Volta Diversions Returned to North Fork Battle Creek and Eagle Canyon

Diversions Only .................................................................................................................................. 3-21

Appendix A Battle Creek Alternatives Matrix

Appendix B Battle Creek Hydroelectric Project—Capacity of Key Facilities

Appendix C Construction and Decommissioning Costs by Alternative

Appendix D Average Monthly In-Stream Flow in Battle Creek by Alternative

Appendix E Average Monthly In-Stream Flow in Battle Creek by Location

Appendix F Average Monthly Hydropower Generation for Each Powerhouse by

Alternative

Appendix G Estimated Annual Operating Costs by Alternative iii

List of Tables

Page

ES-1 Estimated Cost of Implementing Alternatives Reviewed ..................................................... ES-3

ES-2 Estimated Average Annual Generation (MWh) of Alternatives Reviewed .......................... ES-4

ES-3 Estimated Average Annual Revenues and Costs of Battle Creek Hydroelectric

Project by Alternatives Reviewed ........................................................................................ ES-4

1 Summary of Prescribed In-Stream Flow Releases from Dams in the Anadromous

Reaches of North and South Fork Battle Creek Based on Modeled Biological

Optimums Determined by the Battle Creek Working Group Biological Team ....................... 1-2

2 Average Monthly Water Flow Released from Coleman Powerhouse Tailrace

(cubic feet per second) by Alternative ................................................................................... 2-9

3 Summary of Key Metrics to Evaluate Alternative 1: Full Decommissioning of

Battle Creek Hydroelectric Project (Full Restoration) ............................................................ 3-6

4 Summary of Key Metrics to Evaluate Alternative 2: Full Decommission of Battle

Creek Hydroelectric Project (Safe Abandonment) ................................................................. 3-6

5 Summary of Key Metrics to Evaluate Alternative 3: Existing Conditions (2019) ................... 3-7

6 Summary of Key Metrics to Evaluate Alternative 4: Restoration Project ............................ 3-10

7 Summary of Key Metrics to Evaluate Alternative 5: Restoration Project without

Inskip Powerhouse and Inskip Diversion Dam ..................................................................... 3-11

8 Summary of Key Metrics to Evaluate Alternative 6: Volta Diversions Only ......................... 3-13

9 Summary of Key Metrics to Evaluate Alternative 7: Volta and North Battle Creek

Feeder Diversions Only ......................................................................................................... 3-15

10 Summary of Key Metrics to Evaluate Alternative 8: Volta and Eagle Canyon

Diversions Only ..................................................................................................................... 3-17

11 Summary of Key Metrics to Evaluate Alternative 9: Eagle Canyon Diversion Only ............. 3-19

12 Summary of Key Metrics to Evaluate Alternative 10: Volta Diversions Returned to North Fork Battle Creek and Eagle Canyon Diversions Only ............................................ 3-21 iv

List of Figures

Follows Page

1 Pre-Restoration Project Conditions ........................................................................................ 1-2

2 Restoration Project ................................................................................................................. 1-2

3 Alternatives 1 and 2: Full Decommissioning of Battle Creek Hydroelectric Project .............. 3-6

4 Alternative 3: Existing Conditions (2019) ............................................................................... 3-8

5 Alternative 4: Restoration Project ........................................................................................ 3-10

6 Alternative 5: Restoration Project without Inskip Powerhouse and Inskip

Diversion Dam ...................................................................................................................... 3-12

7 Alternative 6: Volta Diversions Only .................................................................................... 3-14

8 Alternative 7: Volta and North Battle Creek Feeder Diversions Only .................................. 3-16

9 Alternative 8: Volta and Eagle Canyon Diversions Only ....................................................... 3-18

10 Alternative 9: Eagle Canyon Diversion Only ......................................................................... 3-20

11 Alternative 10: Volta Diversions Returned to North Fork Battle Creek and Eagle

Canyon Diversions Only ........................................................................................................ 3-22 v

Acronyms and Abbreviations

CDFW California Department of Fish and Wildlife

CEQA California Environmental Quality Act cfs cubic feet per second

CNFH Coleman National Fish Hatchery

EIS/EIR Final Battle Creek Salmon and Steelhead Restoration Project Environmental Impact Statement/Environmental Impact Report

FERC Federal Energy Regulatory Commission

Hydroelectric Project Battle Creek Hydroelectric Project, FERC Project No. 1121

Management Team Battle Creek Resource Agency Management Team, comprised of management representatives from the U.S. Bureau of Reclamation, U.S.

Fish and Wildlife Service, National Marine Fisheries Service, California Department of Fish and Wildlife, and State Water Resources Control Board

MW megawatt

MWh megawatt hour

NEPA National Environmental Policy Act

NMFS National Marine Fisheries Service

PG&E Pacific Gas and Electric Company

Resource Agencies U.S. Bureau of Reclamation, U.S. Fish and Wildlife Service, National Marine Fisheries Service, and California Department of Fish and Wildlife

RPS Renewable portfolio standards

USBR U.S. Bureau of Reclamation

USFWS U.S. Fish and Wildlife Service

USGS United States Geological Survey vi

ES-1

Executive Summary

Purpose of the Report The purpose of this report is to provide the Battle Creek Resource Agency Management Team1

(Management Team) with information relevant to the consideration of the future disposition and operation of assets that make up the Federal Energy Regulatory Commission (FERC) Project No.

1121 (Battle Creek Hydroelectric Project, or Hydroelectric Project).2 In July 2018, Pacific Gas and

Electric Company (PG&E) informed the Management Team that PG&E’s intent is to either transfer ownership to a willing buyer or to decommission the Hydroelectric Project, and that PG&E does not intend to seek a new FERC license when the current license expires in July 2026. PG&E asked the

Management Team to consider taking over operation of the Hydroelectric Project.

Specifically, this report considers and reviews various future potential Hydroelectric Project configurations (i.e., alternatives) that could be in place, either due to project abandonment, transfer of project ownership, or other revisions of the Hydroelectric Project components. In assessing these alternatives, consideration is given to:

⚫ capital costs of construction and/or decommissioning of Hydroelectric Project components;

⚫ expected annual energy generation; annual revenues from expected energy generation;

⚫ annual expected costs of operating the Hydroelectric Project;

⚫ annual net revenues resulting from expected costs and revenues; and

⚫ in-stream flows at various points in the watershed.

This report has used certain estimates provided by PG&E, including, but not limited to, construction and decommissioning cost estimates, historical operating costs, and certain operating characteristics of the Hydroelectric Project. Certain estimates provided by PG&E, including annual operating costs and generation curves, were used without independent review or modification. This report cannot, and does not, make any representation as to the accuracy or validity of those items provided by PG&E and used in this report.

In some instances, analyses developed in this report used data provided by PG&E to create estimates of potential future project costs, generation, and revenue under various project alternatives. PG&E did not provide any guidance on the application of their estimates, including the apportionment, completeness, or adequacy of such data and should not be presumed to agree with any final estimates provided herein.

Construction and decommissioning costs provided by PG&E were identified as preliminary and, while used as a starting point, have been reviewed by the U.S. Bureau of Reclamation (USBR). As a

1 The Battle Creek Resource Agency Management Team is comprised of management representatives from the National Marine Fisheries Service (NMFS), the United States Fish and Wildlife Service (USFWS), the United States Bureau of Reclamation (USBR), the California Department of Fish and Wildlife (CDFW), and the State Water Resources Control Board.

2 The Metropolitan Water District of Southern California engaged LKM Associates, LLC and received assistance from USBR to prepare this report.

ES-2

result of that review, construction and decommissioning costs provided by PG&E have been revised to account for an expected cost increase from preliminary to final cost estimates, based on experience from estimated and actual costs of construction and decommissioning already completed as part of the Battle Creek Salmon and Steelhead Restoration Project (Restoration Project).

The following revisions were made to the preliminary construction and decommissioning estimates provided by PG&E to arrive at an expected final cost of construction, decommissioning, and implementation of each alternative.

⚫ All preliminary decommissioning costs provided by PG&E were increased by 75%. This increase was based on a cost increase trend of 75% between preliminary design and final design-level or contract costs that has been observed by USBR for the decommissioning efforts (dam and canal removal) undertaken to date for the Restoration Project.

⚫ All construction costs provided by PG&E and USBR were increased by 133%. This increase was based on a cost increase trend of 133% between preliminary design and final design-level or contract costs that has been observed by USBR for the construction efforts undertaken to date for the Restoration Project.

⚫ The cost of non-construction activities (planning, engineering, and environmental and cultural resources compliance) that are estimated to be required for decommissioning and construction work were not provided by PG&E. These costs were estimated to equal approximately 75% of final construction and decommissioning costs, based on costs observed by USBR to date under the Restoration Project.

Summary of Alternatives Reviewed The many different diversion and generation facilities that make up the Hydroelectric Project allow for the consideration of an extremely large number of potential project configurations or alternatives. Indeed, many alternatives to the Restoration Project were considered, including full decommissioning of the Hydroelectric Project, prior to reaching consensus on the Restoration

Project, as memorialized in a 1999 Memorandum of Understanding between PG&E, USBR, U.S. Fish and Wildlife Service (USFWS), National Marine Fisheries Service (NMFS), and California Department of Fish and Wildlife (CDFW) (1999 MOU). Several potential restoration projects were examined in detail in the July 2005 Final Battle Creek Salmon and Steelhead Restoration Project Environmental

Impact Statement/Environmental Impact Report (EIS/EIR. Other potential restoration projects were considered in the EIS/EIR but not analyzed further because they did not meet the stated purpose and need.

This report will examine and compare the potential costs, generation impacts, and in-stream flow impacts of implementing 10 different project configurations or alternatives. The alternatives examined, which were developed by the Battle Creek Resource Agency Technical Team,3 are identified below, followed by a summary of cost, generation, and net project revenue data in Tables

ES-1 through ES-3. Descriptions of the alternatives listed below are presented in Chapter 3, Analysis of Alternatives.

3 The Battle Creek Resource Agency Technical Team is comprised of representatives from USBR, USFWS, NMFS, and

CDFW.

ES-3

⚫ Alternative 1, Full Decommissioning of the Battle Creek Hydroelectric Project (Full Restoration)

⚫ Alternative 2, Full Decommissioning of the Battle Creek Hydroelectric Project (Safe

Abandonment)

⚫ Alternative 3, Existing Conditions (2019)

⚫ Alternative 4, Restoration Project

⚫ Alternative 5, Restoration Project without Inskip Powerhouse and Inskip Diversion Dam

⚫ Alternative 6, Volta Diversions Only

⚫ Alternative 7, Volta and North Battle Creek Feeder Diversions Only

⚫ Alternative 8, Volta and Eagle Canyon Diversions Only

⚫ Alternative 9, Eagle Canyon Diversion Only

⚫ Alternative 10, Volta Diversions Returned to North Fork Battle Creek and Eagle Canyon

Diversions Only

Table ES-1 Estimated Cost of Implementing Alternatives Reviewed

Alternative

Construction / Decommissioning

Cost

Non- Construction

Cost

Total Implementation

Cost

1 – Full Decommissioning of the Battle Creek Hydroelectric Project (Full Restoration)

$224,227,158 $168,170,368 $392,397,526

2 – Full Decommissioning of the Battle Creek Hydroelectric Project (Safe Abandonment)

$139,300,284 $104,475,213 $243,775,497

3 – Existing Conditions (2019) $0 $0 $0

4 – Restoration Project $46,751,525 $35,063,644 $81,815,169

5 – Restoration Project without Inskip Powerhouse and Inskip Diversion Dam

$43,084,714 $32,313,535 $75,398,249

6 – Volta Diversions Only $67,331,546 $50,498,659 $117,830,205

7 – Volta and North Battle Creek Feeder Diversions Only

$65,497,640 $49,123,230 $114,620,870

8 – Volta and Eagle Canyon Diversions Only $59,484,351 $44,613,263 $104,097,614

9 – Eagle Canyon Diversion Only $85,086,656 $63,814,992 $148,901,649

10 – Volta Diversions Returned to North Fork Battle Creek and Eagle Canyon Diversions Only

$61,616,217 $46,212,163 $107,828,380

ES-4

Table ES-2 Estimated Average Annual Generation (MWh) of Alternatives Reviewed

Alternative

Annual Generation

(MWh)

1 – Full Decommissioning of the Battle Creek Hydroelectric Project (Full Restoration) 0

2 – Full Decommissioning of the Battle Creek Hydroelectric Project (Safe Abandonment) 0

3 – Existing Conditions (2019) 167,114

4 – Restoration Project 181,010

5 – Restoration Project without Inskip Powerhouse and Inskip Diversion Dam 133,450

6 – Volta Diversions Only 112,058

7 – Volta and North Battle Creek Feeder Diversions Only 117,492

8 – Volta and Eagle Canyon Diversions Only 128,016

9 – Eagle Canyon Diversion Only 21,900

10 – Volta Diversions Returned to North Fork Battle Creek and Eagle Canyon Diversions Only

87,259

MWh Megawatt hour

Table ES-3 Estimated Average Annual Revenues and Costs of Battle Creek Hydroelectric Project by Alternatives

Reviewed

Alternative

Revenue from

Generation

Cost of Project

Operation

Project Net Revenue

(Loss)

1 – Full Decommissioning of the Battle Creek Hydroelectric Project (Full Restoration)

$0 $0 $0

2 – Full Decommissioning of the Battle Creek Hydroelectric Project (Safe Abandonment)

$0 $0 $0

3 – Existing Conditions (2019) $7,520,148 $7,354,840 $165,308

4 – Restoration Project $8,145,468 $8,571,570 $(426,102)

5 – Restoration Project without Inskip Powerhouse and Inskip Diversion Dam

$6,005,232 $6,910,920 $(905,688)

6 – Volta Diversions Only $5,042,628 $6,342,260 $(1,299,632)

7 – Volta and North Battle Creek Feeder Diversions Only $5,287,140 $6,468,080 $(1,180,950)

8 – Volta and Eagle Canyon Diversions Only $5,760,720 $6,785,100 $(1,024,380)

9 – Eagle Canyon Diversion Only $985,500 $4,498,570 $(3,513,070)

10 – Volta Diversions Returned to North Fork Battle Creek and Eagle Canyon Diversions Only

$3,926,664 $6,129,170 $(2,202,506)

ES-5

Summary of Other Key Considerations While this report describes the potential cost and revenue impacts involved with the implementation of alternative future Hydroelectric Project configurations, several additional uncertainties exist and may warrant further consideration. Chapter 2, Key Considerations, summarizes the following issues, attempts to describe some of those uncertainties, and explains the impact these issues may have on the feasibility of implementing the alternatives examined in this report.

⚫ Future Hydroelectric Project ownership

⚫ Decommissioning costs

⚫ Non-construction costs

⚫ Depreciation and amortization of capital costs

⚫ Financing costs

⚫ Legal and professional costs

⚫ FERC relicensing

⚫ 1999 MOU obligations

⚫ Economic viability of future Hydroelectric Project

⚫ Consequences to Coleman National Fish Hatchery (CNFH) operations

⚫ California energy conditions

⚫ PG&E bankruptcy

⚫ Other key considerations not addressed in this report

While this is not an exhaustive list of uncertainties, these matters should be considered in any future determination of whether further analysis or potential implementation of an alternative

Hydroelectric Project and Restoration Project is warranted.

Summary of Key Findings As a result of the analyses undertaken in this report, several key findings were identified and are summarized here.

⚫ The anticipated cost sharing between PG&E and the Resource Agencies4 contemplated in the

1999 MOU changed significantly. The Resource Agencies anticipated contribution (via federal, state, and private funding) has increased from $31 million to $173.5 million (inclusive of interim flow purchase costs per agreements between PG&E and USBR). Of that $173.5 million, the

Resource Agencies have secured $130 million, of which $116.8 million has already been spent or obligated. In contrast, PG&E’s anticipated contribution of $20.6 million in foregone energy, pursuant to the MOU, has not increased; however, PG&E has contributed $9.3 million in foregone energy pursuant to interim flow purchase agreements between PG&E and USBR.

4 The Resource Agencies are comprised of representatives from USBR, USFWS, NMFS, and CDFW.

ES-6

⚫ Based on discussions with PG&E and the Resource Agencies, the completion of the Restoration

Project as currently configured is unlikely.

⚫ The alternatives examined in this report, including an Existing Conditions alternative, indicate that the Hydroelectric Project is not likely to be economically viable, which suggests PG&E will have difficulty finding a successor.

⚫ Other factors that could dissuade a potential successor include the costs of securing a new FERC license, PG&E’s remaining 1999 MOU obligations, and the reintroduction of federally-listed endangered winter-run Chinook salmon to Battle Creek in 2017.

⚫ If PG&E is unable to find a successor, PG&E would likely need to pay between $139 million and

$224 million in construction costs, and an additional $104 million to $168 million in non-construction costs, to decommission the Hydroelectric Project.

⚫ If PG&E is unable to find a successor, CNFH would no longer be able to depend on the

Hydroelectric Project to perform current hatchery operations and, therefore, would need to implement hatchery improvements, including new intakes and water temperature control devices, which could result in significant costs.

1-1

Chapter 1 Background

Battle Creek Hydroelectric Project The origins of the Battle Creek Hydroelectric Project (Hydroelectric Project) construction of Volta

Powerhouse in 1901 by the Keswick Electric Power Company. By 1911, the South, Inskip, and

Coleman Powerhouses were completed. These four powerhouses were acquired by Pacific Gas &

Electric Company (PG&E) in 1919 and reconstructed. A new Volta 2 Powerhouse was added around

1980. The Hydroelectric Project was originally licensed by the Federal Power Commission in 1932 and was relicensed by its successor, the Federal Energy Regulatory Commission (FERC), in 1976 for

50 years. The Hydroelectric Project is located in Shasta and Tehama Counties in the watersheds of

North Fork Battle Creek and South Fork Battle Creek (Figure 1). The five powerhouses within the

Hydroelectric Project have a combined hydroelectric generating capacity of 37.9 megawatts (MW).

Major project features include the five aforementioned powerhouses, two storage reservoirs, three forebays, various diversion dams, and water conveyances consisting of canals, tunnels, and pipelines.

Battle Creek Salmon and Steelhead Restoration Project In 1999, a Memorandum of Understanding (1999 MOU) between PG&E and the U.S. Bureau of

Reclamation (USBR), U.S. Fish and Wildlife Service (USFWS), National Marine Fisheries Service

(NMFS), and the California Department of Fish and Wildlife (CDFW) (Resource Agencies) created the

Battle Creek Salmon and Steelhead Restoration Project (Restoration Project). The Restoration

Project was intended to reestablish 48 miles of salmon and steelhead habitat on Battle Creek and its tributaries while minimizing the loss of hydroelectric power.

National Environmental Policy Act (NEPA) and California Environmental Quality Act (CEQA) processes for the Restoration Project were initiated in November 1999, the Final Environmental

Impact Statement/Environmental Impact Report (EIS/EIR) was issued in July 2005, the CEQA Notice of Determination was signed by the California State Water Resources Control Board in December

2008, and the NEPA Record of Decision was signed by USBR in January 2009. Implementation of the

Restoration Project includes the institution of increased in-stream flows and modification of facilities at Hydroelectric Project diversion dam sites located on North Fork Battle Creek, South Fork

Battle Creek, Baldwin Creek, Soap Creek, and Ripley Creek in three phases (Phases 1A, 1B, and 2)

(Figures 2A and 2B).

During the 1999 MOU negotiations, fisheries biologists estimated the flow regime to be instituted by the Restoration Project would restore anadromous fish habitat to approximately 89% of optimal levels. As a point of comparison, the same parties estimated the flow regime in place prior to any restoration activities (which conforms to the then-existing FERC license) provided anadromous fish habitat that was approximately 17% of optimal levels. In-stream flow requirements defined by the

1999 MOU are shown in Table 1.

1-2

Table 1 Summary of Prescribed In-Stream Flow Releases from Dams in the Anadromous Reaches of North and South Fork Battle Creek Based on

Modeled Biological Optimums Determined by the Battle Creek Working Group Biological Team

Dam Fork

Monthly Minimum Flow (Cubic Feet per Second) to be Released from Dam

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Keswick North 3A 3A 3A 3A 3A 3A 3A 3A 3A 3A 3A 3A

NBCF North 88F 88F 88F 67F 47F 47F 47F 47F 47F 47F 47F 88F

Eagle North 46S 46S 46S 46S 35S 35S 35S 35S 35S 35S 35S 46S

Wildcat North (Facility decommissioned; no in-stream flow requirement)

South South (Facility decommissioned; no in-stream flow requirement)

Inskip South 86P1 86P1 86P1 61P1 40P1 40P1 40P1 40P1 40P1 40P1 40P1 86P1

Coleman South (Facility decommissioned; no in-stream flow requirement)

NBCF = North Battle Creek Feeder Diversion Dam

A = Accretion flows downstream of the Keswick Dam can exceed 100% of maximum WUA for steelhead spawning in the portion of the Keswick reach available to anadromous fish and can exceed the predictive capability of the IFIM model. Accretion flows downstream of the Keswick Dam provide >90% of maximum WUA for steelhead rearing in the portion of the Keswick reach available to anadromous fish.

F = On occasion the release is not attainable due to the quantity of inflow reaching North Battle Creek Feeder Diversion. Additional inflows to the North Battle Creek

Feeder are occasionally received from the junction box of the Volta 2 Powerhouse tailrace and Cross-County Canal a short distance downstream.

S = Eagle Canyon Dam releases reported in this include releases from Eagle Canyon Springs (those springs located downstream of Eagle Canyon Dam that were included in the “interim flow agreement” between PG&E and USBR; USBR 1998a)

P1 = The prescribed in-stream flow will be the total available inflow in South Fork Battle Creek upstream of the South Powerhouse at times when the available inflow is less than the prescribed flow.

W ildcat Canal

North Battle Creek Reservoir

McCumber Reservoir

Al Smith Diversion Dam

Keswick Diversion Dam

Volta Powerhouse

Eagle Canyon Diversion Dam

Asbury Pump Station and Diversion Dam

Darrah Springs Fish Hatchery

Paci�c Power Canal

Coleman Forebay

Coleman Powerhouse

Coleman National Fish Hatchery

Coleman Diversion Dam

Inskip Diversion Dam

South Diversion Dam

South Powerhouse

Inskip Powerhouse

SOUTH FORK BATTLE CREEK

BATTLE CREEK

NORTH FORK BATTLE CREEK

Ripley Creek

Unio n

Canal

Soap Creek Feeder

Soap C reek

Lower Ripley Creek Feeder Diversion Dam

Lower Ripley Creek Feeder

Digger Creek Feeder

Upper Ripley Creek Diversion

Upper Ripley Creek Feeder

Soap Creek Feeder Diversion Dam

Lake Grace Lake Nora

Rock Creek

Bailey Creek

Deer Creek

Wildcat Diversion Dam

SACRAM

EN

TO

RIV

ER

Darrah

Creek

North Battle Creek Feeder

Diversion Dam

Coleman Canal Inskip Canal

Cross Country Canal

Keswick Canal

Al Smith Canal Baldwin–Lake Grace Canal

North Battle Creek Feeder

Eagle Canyon Canal South Canal

Digger Creek

Loomis Mill Canal

Armstrong Canals

No. 1 and No. 2

Lower Mill Creek Canal

Coleman National

Fish Hatchery Weir

Volta Powerhouse #2

Coleman National

Fish Hatchery Intakes

Ba ld w in

C re ek

(diverts from Shingle Creek) Shingle Creek Canal

Figure 1 Pre-Restoration Project Conditions

N

Not to Scale

IC

F

G ra ph ic s

.1

(6

-2 4-

) t m

Battle Creek Legend

Water conveyed in penstocks and/or other pipelines

Smaller creeks and tributaries

Rivers and major creeks

Water conveyed in canals (open channels, tunnels, or �umes)

Reservoirs North Battle Creek Reservoir . . . . . . . . . . . . . . . . . . .1,090 acre feet McCumber Reservoir . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 acre feet

Flow Capacities North Battle Creek Feeder Canal . . . . . . . . . . . . . . . . . . . . . . . 50 cfs Cross Country Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 cfs Eagle Canyon Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 cfs Inskip Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 cfs Coleman Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 cfs

Power Houses Volta I (9 MW) and II (0.9 MW) Powerhouses . . . . . . . . . . . 115 cfs South Powerhouse (7 MW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 cfs Inskip Powerhouse (8 MW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 cfs Coleman Powerhouse (13 MW) . . . . . . . . . . . . . . . . . . . . . . . 340 cfs

North Battle Creek Reservoir

McCumber Reservoir

Al Smith Diversion Dam

Keswick Diversion Dam

Volta Powerhouse

Eagle Canyon Diversion Dam

Asbury Pump Station and Diversion Dam

Darrah Springs Fish Hatchery

Paci�c Power Canal

Coleman Forebay

Coleman Powerhouse

Inskip Diversion Dam

South Powerhouse

Inskip Powerhouse

SOUTH FORK BATTLE CREEK

BATTLE CREEK

NORTH FORK BATTLE CREEK

Ripley Creek

Unio n

Canal

Soap C reek

Digger Creek Feeder

Upper Ripley Creek Diversion

Upper Ripley Creek Feeder

Lake Grace Lake Nora

Rock Creek

Bailey Creek

Deer Creek

Baldwin Creek Fish Barrier

SACRAM

EN

TO

RIV

ER

Darrah

Creek

North Battle Creek Feeder

Diversion Dam

Coleman Canal Inskip Canal

Cross Country Canal

Keswick Canal

Al Smith Canal Baldwin–Lake Grace Canal

North Battle Creek Feeder

Eagle Canyon Canal

Digger Creek

Loomis Mill Canal

Armstrong Canals

No. 1 and No. 2

Lower Mill Creek Canal

Coleman National

Fish Hatchery Weir

Volta Powerhouse #2

Ba ld w in

C re ek

Natural Fish Barrier

Upper Project Limit

Natural Fish Barrier

Upper Project Limit Lower Project Limit

Fish Screen and Fish Ladder

Fish Screen and Fish Ladder

Fish Screen and Fish Ladder

South Powerhouse Tailrace Connector

Inskip Penstock Bypass

Inskip Tailrace

Connector

W ildcat Canal

Wildcat Diversion Dam

Coleman Diversion Dam

Soap Creek Feeder

Lower Ripley Creek Feeder

Soap Creek Feeder Diversion Dam

South Canal

Lower Ripley Creek Feeder Diversion Dam

South Diversion Dam

(diverts from Shingle Creek) Shingle Creek Canal

Coleman National Fish Hatchery

Coleman National

Fish Hatchery Intakes

Figure 2A Restoration Project

(Showing Elements to be Removed/Decommissioned)

N

Not to Scale

Facility to be Added/Improved Facility to be Decommissioned/Removed

Battle Creek Legend

Water conveyed in penstocks and/or other pipelines

Smaller creeks and tributaries

Rivers and major creeks

Water conveyed in canals (open channels, tunnels, or �umes)

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Reservoirs North Battle Creek Reservoir . . . . . . . . . . . . . . . . . . .1,090 acre feet McCumber Reservoir . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 acre feet

Flow Capacities North Battle Creek Feeder Canal . . . . . . . . . . . . . . . . . . . . . . . 50 cfs Cross Country Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 cfs Eagle Canyon Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 cfs Inskip Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 cfs Coleman Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 cfs

Power Houses Volta I (9 MW) and II (0.9 MW) Powerhouses . . . . . . . . . . . 115 cfs South Powerhouse (7 MW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 cfs

McCumber Reservoir

Al Smith Diversion Dam

Keswick Diversion Dam

Volta Powerhouse

Eagle Canyon Diversion Dam

Asbury Pump Station and Diversion Dam

Darrah Springs Fish Hatchery

Paci�c Power Canal

Coleman Forebay

Coleman Powerhouse

Inskip Diversion Dam

South Powerhouse

Inskip Powerhouse

SOUTH FORK BATTLE CREEK

BATTLE CREEK

NORTH FORK BATTLE CREEK

Ripley Creek

Unio n

Canal

Soap C reek

Digger Creek Feeder

Upper Ripley Creek Diversion

Upper Ripley Creek Feeder

Lake Grace Lake Nora

Rock Creek

Bailey Creek

Deer Creek

Baldwin Creek Fish Barrier

SACRAM

EN

TO

RIV

ER

Darrah

Creek

North Battle Creek Feeder

Diversion Dam

Coleman Canal Inskip Canal

Cross Country Canal

Keswick Canal

Al Smith Canal Baldwin–Lake Grace Canal

North Battle Creek Feeder

Eagle Canyon Canal

Digger Creek

Loomis Mill Canal

Armstrong Canals

No. 1 and No. 2

Lower Mill Creek Canal

Coleman National

Fish Hatchery Weir

Volta Powerhouse #2

Ba ld w in

C re ek

Natural Fish Barrier

Upper Project Limit

Natural Fish Barrier

Upper Project Limit Lower Project Limit

Fish Screen and Fish Ladder

Fish Screen and Fish Ladder

Fish Screen and Fish Ladder

South Powerhouse Tailrace Connector

Inskip Tailrace

Connector

Inskip Penstock Bypass

(diverts from Shingle Creek) Shingle Creek Canal

Coleman National Fish Hatchery

Coleman National

Fish Hatchery Intakes

Figure 2B Restoration Project (After Completion)

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Not to Scale

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Battle Creek Legend

Water conveyed in penstocks and/or other pipelines

Smaller creeks and tributaries

Rivers and major creeks

Water conveyed in canals (open channels, tunnels, or �umes)

Reservoirs North Battle Creek Reservoir . . . . . . . . . . . . . . . . . . .1,090 acre feet McCumber Reservoir . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 acre feet

Flow Capacities North Battle Creek Feeder Canal . . . . . . . . . . . . . . . . . . . . . . . 50 cfs Cross Country Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 cfs Eagle Canyon Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 cfs Inskip Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 cfs Coleman Canal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . <380 cfs

Power Houses Volta I (9 MW) and II (0.9 MW) Powerhouses . . . . . . . . . . . 115 cfs South Powerhouse (<7 MW) . . . . . . . . . . . . . . . . . . . . . . . . . <190 cfs Inskip Powerhouse (<8 MW) . . . . . . . . . . . . . . . . . . . . . . . . . <270 cfs Coleman Powerhouse (<13 MW) . . . . . . . . . . . . . . . . . . . . . <340 cfs

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USBR and PG&E have entered into Agreements by the United States to Pay Pacific Gas and Electric

Company for Reducing Diversions from Battle Creek to the Battle Creek Project (known as interim flow agreements) to provide immediate habitat improvement for the Battle Creek fisheries while the

Restoration Project is implemented. The interim instream flow objective for North Fork Battle Creek is 30 cubic feet per second (cfs) (± 5 cfs), and the interim instream flow objective for South Fork

Battle Creek varies from 5 cfs to 30 cfs (± 5cfs). Under the interim flow agreements, PG&E has been partially compensated for reducing diversions from Battle Creek to the Hydroelectric Project for hydropower generation to meet these interim instream flow objectives. These interim flow purchases have continued as PG&E and the Resource Agencies have not reached agreement on when to release MOU flows at the new North Fork Battle Creek fish screen and ladder facilities sites.

Phase 1A

Phase 1A includes the installation of fish screens and fish ladders at the North Battle Creek Feeder

Diversion Dam and Eagle Canyon Diversion Dam on North Fork Battle Creek, the removal of Wildcat

Diversion Dam and Canal on North Fork Battle Creek, and construction of a fish barrier weir on

Baldwin Creek downstream of the Asbury Pump Diversion Dam.

Wildcat Diversion Dam and Canal were removed in 2010. In October 2011, work occurred along the

Wildcat Canal access road to correct drainage problems and to install permanent erosion control measures.

The construction of a fish barrier weir, located downstream of the Asbury Pump Diversion Dam on

Baldwin Creek, was completed in 2013. The barrier weir, which allows for a constant release of 5 cfs in Baldwin Creek, is restoring about 1 mile of suitable habitat for Chinook salmon and steelhead while protecting the upstream Darrah Springs Trout Hatchery (managed by the California

Department of Fish and Wildlife) from infectious diseases carried by the anadromous fish.

Fish screens and fish ladders were constructed at the Eagle Canyon Diversion Dam and North Battle

Creek Feeder Diversion Dam sites between 2010 and 2012. Additional modifications to North Fork

Battle Creek diversions and their associated screens and ladders were determined to be necessary in 2013. As a result, modifications were made to the North Battle Creek Feeder Diversion Dam fish ladder and fish screen to ensure hydraulic design criteria are met, to address operational and access needs and safety issues, and to improve the function and durability of existing maintenance, sensor, and monitoring systems. Additionally, Eagle Canyon Diversion Dam modifications were made to address operational and access needs, safety issues, and undesirable false fish-attraction spills.

North Battle Creek Feeder Diversion Dam and Eagle Canyon Diversion Dam facility testing, acceptance, and full transfer to PG&E are anticipated to be completed in 2019 if issues are resolved at Eagle Canyon Diversion Dam.

Upon the completion of Phase 1A, 25 miles of stream habitat will be restored.

Phase 1B

Phase 1B includes the installation of an Inskip Powerhouse tailrace connector and penstock bypass on South Fork Battle Creek. A 5,600-foot penstock bypass pipeline and chute system to Coleman

Canal and a 650-foot tailrace connector from Inskip Powerhouse to Coleman Canal were constructed in 2012 to prevent the mixing of North Fork Battle Creek water with South Fork Battle Creek water.

Due to a significant storm event in December 2012, access road repairs and sediment erosion

1-4 cleanup took place in 2013. Safety and facility access improvements occurred in 2014 and 2015.

Low-flow facility testing was performed in 2016, and high flow facility testing was performed in

2017. Facility acceptance and transfer to PG&E was completed in February 2019.

Phase 2

Phase 2 includes the installation of a fish screen and fish ladder on Inskip Diversion Dam, installation of a South Powerhouse tailrace connector, and the removal of Lower Ripley Creek

Feeder, Soap Creek Feeder, Coleman, and South Diversion Dams and appurtenant conveyance systems on South Fork Battle Creek.

Phase 2 activities were planned to occur under three parts.

⚫ Part 1 – Hydropower Facilities Modifications. Includes the construction of a South

Powerhouse tailrace connector tunnel to Inskip Canal (including a mechanically stabilized earth dike) and an Inskip Diversion Dam access road.

⚫ Part 2 – Hydropower Facilities Modifications. Includes the construction of an Inskip

Diversion Dam fish screen and ladder and the removal of Lower Ripley Creek Feeder and

Coleman Diversion Dams.

⚫ Part 3 – South Diversion Dam and Canal Removal. Includes the removal of South Diversion

Dam, South Canal, and Soap Creek Feeder Diversion Dam.

Uncertainty regarding the future ownership and/or operation of the Hydroelectric Project significantly increased near the end of 2018. Continued progress on Phase 2 activities, none of which have been constructed, has been suspended until further information on the future ownership and operation of the Hydroelectric Project is available that would provide greater certainty around the value of Restoration Project actions that have not yet been undertaken or completed. The completion of Phase 2, as planned, would provide 23 miles of additional restored stream habitat.

Restoration Project Cost Sharing (Anticipated vs. Actual) While both the Resource Agencies and PG&E can claim significant in-lieu contributions to engage their respective staffs in implementing the Restoration Project, it is clear that:

⚫ the Resource Agencies’ contribution (via federal, state, and private funding) has increased significantly above the amount anticipated in 1999; and

⚫ PG&E’s funding contribution has decreased significantly below the amount anticipated in 1999.

Pursuant to the 1999 MOU, the Restoration Project was anticipated to cost $51.6 million, of which:

⚫ $31 million (60%) was to be secured by the Resource Agencies via federal, state, and private funding; and

⚫ $20.6 million (40%) was to be provided by PG&E via foregone power.

To date, $126.1 million has been spent or obligated on the Restoration Project (inclusive of interim flow purchase costs), of which:

⚫ $116.8 million (93%) has been secured by the Resource Agencies via federal, state, and private funding; and

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⚫ $9.3 million (7%) has been provided by PG&E via foregone power, pursuant to interim flow purchase agreements between PG&E and USBR.

As of August 2019, the Restoration Project (inclusive of interim flow purchase costs) is estimated to cost $204.7 million, of which:

⚫ $173.5 million (85%) has either been, or will be, secured by the Resource Agencies via federal, state, and private funding sources;

⚫ $20.6 million (10%) has yet to be provided by PG&E via foregone power, pursuant to the 1999

MOU; and

⚫ $10.6 million (5%), of which $9.3 million has been provided, with an additional $1.3 million anticipated to be provided by PG&E via foregone power, pursuant to interim flow agreements between PG&E and USBR.

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Chapter 2 Key Considerations

Future Hydroelectric Project Ownership In late 2017, PG&E began the process of considering the costs of completing Phase 2 Restoration

Project activities and securing a new FERC license in relation to the long-term value of the

Hydroelectric Project. As a result, PG&E began earnestly evaluating alternatives to completing the

Restoration Project.

In December 2017, Black & Veatch completed an evaluation of the costs of fully decommissioning the Hydroelectric Project for PG&E.5 In this evaluation, preliminary cost estimates to fully decommission the Hydroelectric Project under two different conditions were made: “Safe

Abandonment” and “Complete Removal.”

An estimate of the cost under a “Safe Abandonment” of all Hydroelectric Project assets (with the exception of transportation facilities and electrical transmission and distribution assets), was developed by individual Hydroelectric Project feature (asset). The preliminary estimate for “Safe

Abandonment” was $71.5 million.

Black & Veatch also identified the potential to decrease the cost of “Safe Abandonment” by utilizing certain less-restrictive assumptions around the level of expected effort to decommission certain types of assets. Specifically, if canals were assumed not to be backfilled, penstocks and siphons were assumed to be simply plugged, and powerhouses and buildings were assumed to remain standing after removing hazardous materials and securing, the cost of decommissioning could be estimated to decrease from $71.5 million to somewhere in the range of $44 million to $59 million.

Black & Veatch also estimated a cost for “Complete Removal” of all Hydroelectric Project features by assuming a percentage increase cost above “Safe Abandonment” for each type of Hydroelectric

Project feature and applying those magnitude increases to each feature’s estimated “Safe

Abandonment” cost. The preliminary estimate for “Complete Removal” was $120 million.

In July 2018, PG&E informed the Management Team that PG&E’s intent is to either transfer ownership to a willing buyer or to decommission the Hydroelectric Project and that PG&E does not intend to seek a new FERC license when the current license expires in July 2026. PG&E asked the

Management Team to consider taking over operation of the Hydroelectric Project.

In November 2018, PG&E circulated a Non-Confidential Summary of the Hydroelectric Project to the

Resource Agencies.6 Specifically, PG&E described within the document its intent to divest the

Hydroelectric Project assets in a single transaction to a single buyer for the benefit of its electric customers.

Based on recent discussions with PG&E, the completion of the Restoration Project as currently configured is unlikely. Options now should consider the full decommissioning of the Hydroelectric

5 Evaluation for Potential Battle Creek Project Decommissioning, Preliminary Construction Cost Estimate. Prepared by Black & Veatch for Pacific Gas & Electric Company. December 29, 2017. B&V Project No. 197381.

6 Non-Confidential Summary – Battle Creek Hydroelectric Project. PG&E. November 2018.

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Project by PG&E and what any other Restoration Project/Hydroelectric Project configuration might look like that could prove beneficial. Defining what is beneficial may require the Resource Agencies to reconsider the relative value of certain, potentially competing, outcomes, including restoration of natural habitat, repositioning of CNFH water supply intakes, and the provision of renewable and clean energy.

Decommissioning Costs If PG&E decommissions the Hydroelectric Project, certain costs will be incurred. As part of decommissioning the Hydroelectric Project, PG&E would be required to undergo a public process through FERC to determine what actions would constitute a decommissioning of the Hydroelectric

Project. The likely minimum action and cost of decommissioning identified in the 2017 Black &

Veatch report is the “Safe Abandonment” estimate ($71.5 million). The higher end of the range of full decommissioning costs identified in the 2017 Black & Veatch report is the “Complete Removal” estimate of $120 million. As noted in the 2017 Black & Veatch report, these are preliminary estimates. Final costs to construct or decommission are typically significantly higher than preliminary estimates. Based on experience gained in the construction and decommissioning efforts that have already occurred as a part of the Restoration Project, these preliminary estimates could be expected to result in final estimated costs of $139 million for a "Safe Abandonment" level of decommissioning to $224 million for a "Complete Removal" level of decommissioning. The public and stakeholders would have the opportunity to weigh in on how decommissioning should occur and what level of restoration should be required. FERC would then rule on what it believes is reasonable. If the decommissioning occurs without any negotiation and is determined entirely through the regulatory process, all costs would be borne by PG&E. It is possible, however, that a negotiated process could occur that decreases the risk of outcomes for PG&E by providing funding for portions of the decommissioning by other parties (e.g., the Resource Agencies).

Even if the Hydroelectric Project goes forward…