The California Public Utilities Commission at its Oct. 10 meeting unanimously approved the sale of two small Pacific Gas & Electric hydroelectric projects to new owners.

Both projects' sales encountered protracted procedural delays, but were greenlighted as part of the commission's consent agenda.

The 5.7-MW Deer Creek Hydroelectric Project is being sold to the Nevada Irrigation District [P-14530] for $1; however, the facilities have an estimated fair market value of negative $7.5 million. The facilities are old and the sales are the best option for ratepayers, according to the CPUC (see CEM No. 1559).

PG&E expects to take a $32.3-million pre-tax loss from the Deer Creek sale. The Utility Reform Network suggested that the loss be amortized over a three-year period to dampen any potential effect on the utility's authorized revenue requirement and rates.

The transaction must still be approved by the Federal Energy Regulatory Commission. Once that final approval has been granted, the closing process should take two or three months.

Also on the consent calendar was the utility's request to sell the Narrows Hydro Project to the Yuba County Water Agency. The 12-MW facility on the Yuba River in Nevada County is licensed by FERC through 2026 [P-1404]. The CPUC at its March 28 meeting had voted unanimously to deny the request without prejudice.

The denial was on procedural grounds, but the commission said it wanted to address the larger policy issue of what should happen to aging hydro facilities that appear to have outlived their usefulness to generate power.

PG&E sought the approval through a pilot program available using the advice-letter process; however, at the March meeting, the commission said the information provided was insufficient and did not enable it to determine whether or not the terms of the transfer were reasonable. The CPUC urged PG&E to make a formal application via a Public Utilities Code Section 851 transaction filing.

The sale price for the facility is $507,500. PG&E will be taking an estimated pre-tax loss on sale of $4.5 million, as well as an after-tax loss on sale that is expected to be $3.2 million. 

CPUC staff said that because the Narrows project's operations already coordinate with those of the Yuba County Water Agency's 55-MW Narrows No. 2 powerhouse [P- 2246], the agency is "a well-situated natural buyer" for the project.

"YCWA's primary reason for buying the project is that it will enable YCWA to own, operate, maintain and control a major artery of its water conveyance facilities necessary for its water supply and regulatory obligations," commission staff said. "In addition, acquisition of the project will enable YCWA to achieve efficiencies and economies of scale with its other hydroelectric and water conveyance facilities which are located in the immediate vicinity of the project."

A PG&E representative said the utility was too busy with public-safety power shut-offs to comment. The utility, which is the largest investor-owned utility operator of hydroelectric power systems in the country, has for the past several years been selling smaller hydropower plants it deemed economically unviable.