MENDOCINO CO., 5/25/26 — The Potter Valley powerhouse that is the engine of the Potter Valley Project has not made electricity since 2021. The dams are still standing. The water still moves. It falls 470 feet from Cape Horn Dam on the upper Eel River through a century-old tunnel and out into the East Branch of the Russian River an hour later — past three generators that no longer turn.
There is no reservoir below the powerhouse. The water drops. It is not pumped back up. There is nowhere to pump it from.
That detail — on every map of the basin since 1908 — is what PG&E’s Tony Gigliotti was trying to put in plain English in an interview with the Voice the morning of May 22.
Gigliotti runs the team that operates the Potter Valley dams for PG&E. And he runs the team that has filed, on PG&E’s behalf, to take them down. Two of the company’s spokespeople were on the conference line with him.
The question on the table was the one this series has been asking since April: could anyone turn the Potter Valley project into a pumped-storage plant?
Gigliotti said, “We would not view that as necessarily a viable option.” Because there’s nowhere below the powerhouse to store the water to pump it back up.
It was the first time the company that owns the dams had said so in public.
The bid that doesn’t pencil
Another water district 600 miles south wants to buy the Potter Valley project anyway.
The Elsinore Valley Municipal Water District sits in Riverside County. It has never run a hydroelectric dam. Two members of President Trump’s cabinet, Agriculture Secretary Brooke Rollins and Interior Secretary Doug Burgum, have publicly backed the district’s interest. Rep. Jared Huffman, whose district covers the Eel River, has been demanding to know why.
The Northern California parties at the table — Sonoma Water, the Mendocino County Inland Water and Power Commission, the Round Valley Indian Tribes, Humboldt County, the California Department of Fish and Wildlife, CalTrout and Trout Unlimited — spent six years negotiating a federally approved plan to take the dams out and keep a smaller, seasonal diversion in place to protect the farms and towns that depend on the Russian River.
The Elsinore Valley district is the first outsider to walk through PG&E’s door since the company started looking for a buyer. By Gigliotti’s account, the bid does not make sense. By Dave Steindorf — the hydropower lead at American Whitewater, a national river-conservation group that has worked the Potter Valley file for years — the bid doesn’t make sense either.
“Not one pumped-storage project has been constructed in the States for decades,” Steindorf said in an interview last week. “They just don’t pencil. Meanwhile, the amount of conventional battery storage that has been brought online is staggering.”
So why is Elsinore making the bid?
Three relationships in writing
The records released by the Elsinore Valley district on the evening of May 21 — 61 documents, 158 pages, in response to a Public Records Act request The Voice filed April 28 — do not identify a plan, but they do name the people in the room.
Bluewater is in the room
On Oct. 6, 2022 — the year Bluewater Renewable Energy Storage Inc. bought a denied California pumped-storage application from Nevada Hydro Co. — Bluewater’s vice president of sustainability sent three emails to Elsinore Valley directors. The emails went out between 2:50 and 3:02 a.m. One to board president Andy Morris. One to director Darcy Burke. One to then-director Harvey Ryan. Each invited its recipient to an open house on what Bluewater called the Bluewater Renewable Energy Storage Project.
Morris and Burke are now driving the Potter Valley bid
Bluewater is what’s left of Nevada Hydro Co. Nevada Hydro spent more than 20 years trying to build the Lake Elsinore Advanced Pumped Storage project, LEAPS. Federal regulators denied LEAPS four times. Nevada Hydro walked away from the federal application in 2020, but the application was not pulled and stayed open. Bluewater bought Nevada Hydro in 2022 and renewed the application. The fourth denial came in May 2023. The docket is still open today.
In 2018, the Elsinore Valley district settled a lawsuit with Nevada Hydro — Bluewater’s predecessor. The settlement itself has not been released. But its content was characterized on the record on April 27 by the district’s community affairs supervisor, Sylvia Ornelas: the settlement, she wrote to The Voice, contains “limited provisions should a successor entity pursue a separate FERC application.”
Bluewater is the successor entity, and Bluewater has been pursuing a separate FERC application. The 2018 settlement, on Ornelas’s own description, anticipated this.
A coalition is being recruited
A letter of interest from the San Gorgonio Pass Water Agency to PG&E, surfaced in mid-May. The letter asks to join a coalition to buy the Potter Valley Project. But the letter to PG&E is in the Elsinore Valley files because Elsinore Valley wrote it. The draft is on what looks like Elsinore Valley letterhead adapted for a different agency. At the point where the agency is supposed to introduce itself, the template still carries the placeholder: “You can talk about yourself here.”
San Gorgonio Pass is a State Water Project contractor based in Beaumont, 35 minutes east of Lake Elsinore, with a 17,300 acre-foot annual entitlement.
A State Water Project contractor has standing to trade water and water rights with other agencies across California, while the Elsinore Valley district does not.
The coalition the Elsinore Valley district is recruiting adds the one capability the district itself lacks.
Two possible plans fit what’s in the records
- A water-rights play. Acquire Potter Valley’s federal license and the senior water rights that come with it. Use San Gorgonio’s State Water Project standing to trade those rights into Southern California’s water market. The water never moves 600 miles. The rights do — on paper, through the SWP. Elsinore Valley ratepayers eventually receive more delivered water, paid for by acquiring senior Northern California rights they would never physically receive.
- A LEAPS revival. Use the Potter Valley federal license to keep Bluewater’s still-open Lake Elsinore docket alive with FERC. The federal license is the asset; the Eel River water itself is not the point. Bluewater holds an open application for a denied California pumped-storage project. A federal hydropower foothold at Potter Valley — even one whose engineering doesn’t pencil there — gives Bluewater’s docket a procedural reason to stay open.
Both plans fit. The records do not identify either. They name the relationships that would support both: lobbying access from Bluewater since 2022, a 2018 settlement that anticipated a successor FERC application, and a coalition partner with the SWP-trading standing the Elsinore Valley district itself does not have.
The federal review of PG&E’s surrender filing opened this summer. The Federal Energy Regulatory Commission, on May 22, eliminated two of the scenarios the Elsinore Valley bid would need: keeping Scott Dam standing, and a federal takeover of the project. Neither pathway will be studied. The Elsinore Valley district has not filed any comment in that proceeding.
The district’s next regular board meeting is June 11, in Lake Elsinore. It is the next scheduled occasion for the people in the room to say which plan they are pursuing — or whether they are pursuing some plan the records do not yet describe.
Part 1 of this series, “The Potter Valley dams are coming down,” ran in The Mendocino Voice on May 1. Part 2, “The downstate bid for Mendocino’s Potter Valley Project,” ran on May 13.