Wednesday, September 13, 2006

Kranz: County windfall won't be spent on dam

By: Gus Thomson, Journal Staff Writer

Placer County Supervisor Bruce Kranz's support for the Auburn dam is well known but his future vision doesn't include using any of the Middle Fork Project's lucrative cash windfall to pay for it.

Kranz said that while his stance is that the $25 million to $90 million that could be reaped from hydro-electric generation should be used on water-related infrastructure, water-quality related projects and energy infrastructure, he would oppose any money flowing toward the Auburn dam.

Kranz said he's not proposing exactly how future funding would be spent. Because of the dependency on water supplies and changing weather patterns, estimates on yearly revenues have ranged from $10 million to $90 million. County projections uses to determine financing were on the lower end -- between $10 million and $15 million.

Future Middle Fork Project revenues should be treated as a reward to Placer County's residents for approving initial financing in the early 1960s by a 25-1 margin, he said. Kranz's proposal calls for special districts and cities to be added to a joint county-water agency commission set up earlier this year to handle the financing of the Federal Energy Regulatory Commission relicensing and then divide revenues afterward.

Replacing septic tanks with wastewater treatment plant connections and bringing treated water to customers who don't have access now are two of the possibilities Kranz sees for using the millions of dollars coming the county's way. He wants that money dedicated to water and energy uses.

But the multipurpose Auburn dam Kranz has been actively supporting as both a supervisor and chairman of the American River Authority is not in his spending plans for Middle Fork funds.

"The Auburn dam is clearly a state project," Kranz said. "I absolutely don't approve (of Middle Fork money for the dam) and will fight it tooth and nail."

The Placer County Water Agency assumes full financial control of the 50-year-old water-and-hydroelectric power project on the American River's middle fork seven years from now -- barring any unforeseen delay in its $50 million relicensing effort with the Federal Energy Regulatory Commission.

Starting in 2013, and after relicensing expenditures are repaid, Placer County and the water agency are set to divide the profits from a potentially lucrative energy generation system. The system of five generators, dams and reservoirs can produce enough energy to provide electricity for 200,000 homes.

Alex Ferreira, chairman of the water agency board, said that the two panels have shown an extraordinary level of cooperation as they move forward on re-licensing and financing through the newly established joint powers authority. Two PCWA and two county supervisors sit on the board and hold votes.

Ferreira said spending priorities will be clearer after 2013, when the new license is in hand. Hopefully, the money will be used for water-related matters between Tahoe and Roseville, he said. And with a project that will be a half-century old by that time, extensive upgrades may be needed, he said.

"But to say how we should spend it now is a terrible thing for the relicensing effort and we may be considering spending money we may never get," Ferreira said.

Kranz first broached his proposal at a joint meeting of the two boards as they met for what ostensibly was a ceremonial vote to approve establishment of the Middle Fork Project Finance Authority in January. He found limited support at that time from his fellow elected officials and Ferreira said he continues to find support lacking for the Kranz proposal.

"It's going to hurt us, if you start including different entities hoping for a share in line for money," Ferreira said. "All of our board members and the majority of supervisors feel that way."

Since the meeting, Kranz has lobbied and won support from the Foresthill Public Utilities District for a plan that board President Brett Grant said is a good idea that could help special districts. The board voted 4-0 to adopt a resolution in support of a plan Grant said could result in funding being redistributed back to special districts through low-interest loans and grants for infrastructure needs.

Currently, Pacific Gas & Electric Company has a power purchase contract with the water agency that also ends in 2013. PG&E pays for all operational and maintenance expenses - an average of $5.5 million a year - and capital costs averaging $2.5 million annually. It also pays $4.8 million a year on the Middle Fork Project's initial $115 million debt. Water Agency staff has operated the Middle Fork Project under the direction of PG&E for the past 43 years.

The county is involved in the Middle Fork Project because under the agency's rules, the Board of Supervisors must approve energy contracts and the expenditure of power revenues after 2013.

Kranz said that as well as the Foresthill district, which provides treated water for the Foresthill area, he has also gained the support of the city of Colfax, the Placer County Special Districts Association and Assemblyman Tim Leslie, R-Tahoe City.

The infusion of Middle Fork funds dedicated for water and energy uses could help wean the area off septic systems, extend regional wastewater pipelines to Colfax and along the Highway 49 corridor, add more fire hydrants in rural communities, and even provide grants to encourage residents to use solar energy, Kranz said.

For Auburn-area Supervisor Jim Holmes, the initial concern is that the carefully crafted financing arrangement county Treasurer Janine Windeshausen brought the two boards together with will unravel with the addition of new, minor players who don't represent the county as a whole. Both the water agency and county boards represent all of the county, he said.

"If you allow cities into the joint powers authority, it could jeopardize our bonding capacity," Holmes said.

Taking a longer view, Holmes said it is difficult for him to talk about money now when it will be available so far in the future.

"I would never want to tie the hands of future boards," Holmes said. "It comes down to the trust we have in our future leaders and the decisions they'll make."

The Journal's Gus Thomson can be reached at gust@goldcountrymedia.com.