Presentation on PG&E Asset Acquisition - FEBRUARY 18, 2021 - TuoCo
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Presentation on PG&E Asset Acquisition FEBRUARY 18, 2021 2/18/2021 1
PG&E Plans for Asset
Disposition
• Several years ago PG&E initiated a program to
dispose of underperforming assets for the benefit
of its ratepayers
• Disposition has taken several forms:
o Sale to a local, and logical buyer (e.g. TUD)
o Advertising for sale to any interested party
o Surrender license
• PG&E has successfully transferred several
facilities (Chili Bar, Merced Falls, Deer Creek,
Narrows 2, etc.), mostly to logical local buyers
• Several more facilities are in process of transfer,
several to interested non-utility or private parties
2/18/2021 2
Options Explored by TUD
• PG&E is interested in divesting the Phoenix Project, plus
Strawberry Dam/Pinecrest Reservoir
o These assets make the most business sense as water supply
focused, rather than generation-focused assets
o Offering first to TUD
• Initial discussions 2016
• TUD & PG&E explored several variants, including Phoenix
only, all of the Spring Gap – Stanislaus system, and
Phoenix + Strawberry/Pinecrest
• A Phoenix + Strawberry/Pinecrest assets transaction best
meets the mutual objectives of TUD and PG&E
2/18/2021 3
Assets Included in
Transaction
1. Phoenix System
o Phoenix facilities, including Lyons Dam & reservoir,
Tuolumne Main Canal & Phoenix Powerhouse, plus
o Associated real assets (lands, roads, easements)
o Water rights associated with the Phoenix Project
o FERC license plus other operational authorities
2. Strawberry Dam and Pinecrest Reservoir
o Strawberry dam and Pinecrest reservoir,
o Additional water rights and regulatory authorities
o Real assets (lands, roads, easements) associated with
Strawberry/Pinecrest
2/18/2021 4
Water Rights Assets
• Pre-1914 Rights
o Statement 993: Priorities 1856 and 1911, for storage at Pinecrest
Reservoir
o Statement 995: Priority 1851, Direct diversion of 52 cfs into the
Tuolumne Main Canal year-round
o Statement 9036:Priority 1897, for storage of 839 AF in Lyons Reservoir
• 1928 Rights
o License 1542: Priority 1928, for increased storage at Lyons (up to
5,508 AF)
o License 1541: Priority 1928, for hydro power generation at the
Phoenix Powerhouse
2/18/2021 5
Obligations for TUD Associated with
Assets
• Lyons and Strawberry dams
o New operational and maintenance paradigm for TUD
o Extensive history, and regulatory ‘playbook’ available
• Tuolumne Main Canal
o Addition to TUD’s already extensive canal and flume
operations
• Phoenix Powerhouse
o New commodity (power) instead of water
o On the order of complexity of TUD’s water and wastewater
processing facilities
• Associated lands, roads and facilities
o Addition to TUD’s current inventory
• Additional communication and control infrastructure
o Expansion of TUD’s current systems
2/18/2021 6
Obligations to be Acquired (cont.)
• Regulatory Obligations
o FERC (licenses), SWRCB (401, water rights), USFS (conditional
use and FERC-required)
• Obligation Categories:
o Operational: minimum instream flows, ramping rates, reservoir
elevation targets
o Monitoring: dams, and monitoring of impacts of project
operations on fish, vegetation, or wildlife
o Maintenance: Dam, canal and road maintenance in
conformance with FERC, USFS and other requirements
o Safety: Dam and fire safety
o Notification & Reporting: both routine and incident reporting
o Recreation: Particularly associated with Lyons and Pinecrest
Reservoirs
2/18/2021 7
Costs & Revenues
• PG&E Cost Information is proprietary and protected under
confidentiality during negotiations
• Revenues from power generation will not be sufficient to cover
the cost of operations
• Revenue from other sources (e.g. water rate increase, or a tax
or assessment of some type) will be necessary
• Further exploration of revenue options will be undertaken in
the coming months
2/18/2021 8
Transaction Process
Part 1 (12 months): Mostly Completed
• Term Sheet w PG&E (executed 12/2019)
• Initial Due Diligence by District, to verify costs & obligations
Part 2: (12 months): underway
• Purchase & Sale Agreement (PSA) w PG&E: underway
• Prop 218 Process (includes general TUD needs): undertake in 2021
• Additional Diligence by District as needed: in parallel with PSA
Part 3: (18 months): after PSA Agreement completed
• Approvals by FERC and CPUC
• Transaction closing activities (real estate closing)
• Hiring, contracting, training, commence transition to District
operations
2/18/2021 9
Transition
• After the PSA is executed, it is submitted to the CPUC for approval
• After CPUC approval, closing activities will include:
• Transfer of various permits and licenses
• CAISO interconnection and power sales arrangements
• TUD to acquire staff and equipment
• Real estate closing (including property, easements, roads, etc.)
• SCADA and communications cut over
• Establish Board policies regarding operations, financial reserves, etc.
2/18/2021 10Process Status and Schedule
DRAFT - SUBJECT TO REVISION
Key Dates and Milestones
Phoenix/Pinecrest Transaction
2021 2022 2023
Task 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6
Transaction
Develop PSA
PG&E Separation of Facilities
CAISO NRI
FERC and CPUC
Final Closing
FERC Processes
Phoenix Final License Application === Post FLA tasks === === === === === === === === === === === === === === === === === === === === === === === === === === === ===
Pinecrest Storage License Process
Due Diligence Tasks:
Financial Update
Pre-Purchase Inventory & Insp.
Dam Safety Update
218 Rate Process
Develop Detailed Costs
Community Outreach
218 Protest Period
218 Rates Adopted
2/18/2021 11Presentation on PG&E Asset Acquisition FEBRUARY 18, 2021 For more information visit: https://tuocoourwater.com/ 2/18/2021 12
United States Bureau of Reclamation
Contract for Water from the Central
Valley Project (New Melones)
OPPORTUNITY TO DIVERSIFY TUOLUMNE
COUNTY WATER SUPPLY
FEBRUARY 18, 2021
2/18/2021United States Bureau of Reclamation CVP Contract
Central Valley Project initiated in 1935
New Melones project authorized in 1940s and completed
in 1979
USBR currently unable to issue new water service
contracts for New Melones water, with the exception of
TUD.
TUD is considered by federal legislation an “in-basin” priority user
Amount of water being sought
Water Needs Assessment
County General Plan
Quantity will lead to Basis of Negotiation (BON)
BON two year time limit
CEQA and NEPA compliance during BON
Quantity of water sought will influence total costs to secure contract
2/18/2021Diversified Water
Sources
PG&E Rights limited to the South Fork of the
Stanislaus.
Watershed of approximately 107 square miles
Other dry year sources are limited
New Melones storage of 2.4 million acre-feet
Watershed of approximately 997 square miles
2/18/2021Access to the Water
Utilization of an existing pumping facility
Distribution limited to a portion of TUD’s ditch system
Could be used to offset water demands
Water would not always be available at the pumping facility
Vulnerability still present during extreme or extended droughts
2/18/2021Map of Facilities
2/18/2021Estimated Costs
Agriculture water = $35/AF
M&I = $60/AF
Environmental Restoration = $10/AF
The ER charge is added to both agriculture and M&I.
If a contract includes both Ag/M&I, then the M&I rate is the
total charge.
Pumping Costs
Electricity Costs of approximately $193/AF
2/18/2021Objectives
Supplemental
o Emergency: fire, MTC failure, etc.
o Drought
o Climate change
o Future County needs
Flexibility
o Ditch outage supply
o Maintenance supply
o Reduce stress on upper system
Timeline
o Expect to execute within 2-3 years
2/18/2021United States Bureau of Reclamation
Contract for Water from the Central
Valley Project (New Melones)
OPPORTUNITY TO DIVERSIFY TUOLUMNE
COUNTY WATER SUPPLY
FEBRUARY 18, 2021
QUESTIONS?
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