A Dam Opportunity

California has a once-in-a-lifetime opportunity to revitalize hundreds of miles of rivers and streams so that they teem with migrating salmon. Thousands of acres of wild lands can be opened to recreation. And the rural north--long tapped by the rest of California for its water--can keep enough of its precious supply to build economic growth.

But this chance will be lost if the Legislature succumbs to increasing pressure to allow Pacific Gas & Electric Co. to turn over its unique hydropower generation system, valued by PG&E; at $3.3 billion, to a wholly owned subsidiary. PG&E; would reap a major tax windfall from this paper sale and free the hydro system from regulation by the state Public Utilities Commission. The firm then would sell its power in the lucrative free market created by electrical deregulation.

In return, PG&E; would devote a minimal $100 million to environmental mitigation and agree only that the new owner would not “significantly impair” existing agreements on water rights and environmental protection. That’s no assurance at all. The paper transfer would free up funds for PG&E; to reduce customer rates under the complex 1996 law deregulating the electric power industry--something the utility will have to in 2002 anyway.

The PG&E; network is the largest privately owned hydro power system in the world, assembled over 100 years. Stretching more than 300 miles, mostly along the western slope of the Sierra Nevada, the system includes 174 dams and 68 power plants that generate nearly 15% of the state’s electricity. PG&E; also owns 136,000 acres of land around the 30 rivers and streams whose flows often are determined by the demand for power.

The transfer would not be subject to an environmental impact review and after five years, the system could be resold to anyone. The fear is that the deregulated system will in the long run be operated to generate the most power for profit with less concern for downstream water needs or the environmental damage caused by surging flows.

One proposal is for the state to assume control of the system for up to six years and then put it on the market, but that idea has gained little backing. It is not unreasonable, however, for the state to delay the transfer for at least a year while it studies the broad public interest at stake. Then, the state could set conditions under which the transfer can be made to help overcome the longtime environmental damage done by the dams and water diversions.

Many of the dams were built 80 or 90 years ago with little thought to the environment. Some smaller ones should be removed and others retrofitted so salmon can get upstream to spawn. Water flows should be more stringently regulated. In the interim, PG&E; could be allowed to go ahead and take the paper write-off. State and federal governments could also finance watershed improvements that assist their program to restore the Sacramento-San Joaquin delta.

PG&E; built this system with pride over the course of a century. Its future should not be decided in the slapdash final days of a legislative session with no chance of determining the long-term consequences to the state.