Business & Real Estate

SMUD set to buy PG&E’s only hydroelectric powerhouse on the American River for $10.4 million

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PG&E is about to go bankrupt. Will the troubled utility keep the lights on as it finds a resolution of the billions of dollars it faces in potential liabilities from the Camp Fire and the wine country wildfires.

The Sacramento Municipal Utility District is moving forward with plans to buy a hydroelectric powerhouse and reservoir from Pacific Gas and Electric Co. for $10.4 million.

In a joint statement, the local utility providers announced that the Chili Bar Hydroelectric Project — a dam, reservoir, spillway and powerhouse that generates electricity north of Placerville on the South Fork of the American River — would be changing hands after SMUD’s board of directors voted Thursday evening to greenlight the purchase.

The purchase is expected to be finalized in 2020.

PG&E said the power values and generation demand on the grid have been declining, so it has sought to get rid of small hydroelectric plants, especially those that are geographically remote.

The Chili Bar generator, which is the only hydroelectric project that PG&E owns in the American River watershed, provides “marginal economic electric generation benefits for PG&E customers,” the statement said. “In some cases, (PG&E) has transferred such projects to regional entities for a better fit.”

SMUD already owns 11 dams and eight powerhouses upstream from Chili Bar in its Upper American River Project — known as the “stairway of power” – so it has been coordinating with PG&E’s Chili Bar operations for some time, according to the statement.

The Upper American River Project is a major power generator for SMUD, as it can provide about 20 percent of customers’ power during a normal water year, the statement said.

The purchase will add 7 megawatts of generation capabilities to SMUD’s portfolio, bringing its hydroelectric generation capacity to 695 megawatts, and help the utility provider’s efforts to reduce its carbon emissions. More than 50 percent of SMUD’s power supply does not emit carbon, according to the statement.

The sale is expected to close in 2020, but is still subject to regulatory review by the Federal Energy Regulatory Commission and the California Public Utilities Commission.

PG&E said it does not expect any jobs to be affected by the sale. The utility provider has previously made sale agreements on small hydroelectric properties including its Merced Falls Project, its Narrows Project and its Deer Creek powerhouse to other local water organizations.

PG&E filed for Chapter 11 bankruptcy protection earlier this year. Several corporations have offered to take over the utility provider, which has been criticized for its role in multiple California wildfires.

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Vincent Moleski covers business and breaking news for The Bee and is a graduate student in literature at Sacramento State. He was born and raised in Sacramento and previously wrote for the university’s student newspaper, the State Hornet.
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