The Potter Valley dams are coming down

MENDOCINO CO., 5/1/26 — The Potter Valley Project, a century-old hydropower complex in Mendocino County, is on its way to the recycle bin. PG&E filed last summer to surrender its federal license. Two dams — Scott and Cape Horn — are coming down. The Eel River water rights pass to the Round Valley Indian Tribes for the first time in a century.

Now a Riverside County water district 600 miles to the south says it might want to buy a piece. The Trump administration is backing the bid. What the district actually wants — water, electricity, or both — is the question. And the district isn’t answering it.

The dams are on their way out

The spillway gates at Scott Dam — half of the project’s dam infrastructure — have been wedged open since 2023, by order of the state. Lake Pillsbury sits at three-quarters of its old capacity. Down the canyon, in Potter Valley itself, the powerhouse hasn’t run since June 2021, when its main transformer failed during routine maintenance. PG&E announced in April 2023 it wouldn’t buy a replacement. Last October, the Federal Energy Regulatory Commission accepted the company’s application to surrender the project’s license and tear down Scott and Cape Horn dams.

A century-old hydropower complex tied to the Russian River by a tunnel through a mountain, on its way out.

PG&E’s surrender filing says only one thing is still on the table for any third party: “certain features of the project such as those for water conveyance.” The federal hydropower license, the company says, is no longer transferable. That’s the narrow opening the Riverside district is reaching into.

The deal local stakeholders built

What an outside acquisition would have to break is the edifice local stakeholders have already built.

Last summer, every party with a stake in the Eel River signed a deal to settle what comes next. The signers: PG&E itself, the Round Valley Indian Tribes, Humboldt and Mendocino counties, Sonoma County’s water agencies, the state’s fish-and-wildlife regulators, and the conservation groups CalTrout and Trout Unlimited.

Under that agreement: PG&E surrenders the license. Scott Dam and Cape Horn Dam come down. A new, smaller diversion at Lake Van Arsdale — the New Eel-Russian Facility, or NERF — takes Eel River water during high-flow periods only.

PG&E’s diversion rights pass to the Round Valley Indian Tribes. The tribes lease a share back to the Eel-Russian Project Authority — a joint body of the local water agencies — in exchange for annual payments and ecological protections. The tribes hold a seat on the authority’s five-member board, alongside two for the Mendocino Inland Water and Power Commission, one for Sonoma Water and one for Sonoma County.

That structure is what Rep. Jared Huffman — whose district covers the Eel River basin — was pointing at on April 22 when he called it “a carefully negotiated two-basin solution that is on the verge of restoring the Eel River while protecting our water supplies and actually securing local ownership of the water right on the Eel River for the first time in a century.”

It is a working framework. Tribes, counties, water agencies, fish-and-game regulators and conservation groups — all on the same page, all with seats at the same table. It took years to build. An outside acquisition would have to break some of those seats.

It’s the tribes’ water — and the tribes haven’t been called

The Round Valley Indian Tribes’ position is that they have held the senior water and fishing rights on the Eel River since time immemorial. From their perspective, that agreement is not a transfer of rights from PG&E. It is the federal recognition of a senior claim that has always been theirs.

The Round Valley Indian Tribes are a sovereign nation under federal law. Any federal action that affects their senior rights triggers a duty of meaningful government-to-government consultation under the federal trust responsibility doctrine. That duty arises from treaty-era principles, predates the current administration by more than a century, and is not optional. It falls on the federal agencies whose actions touch tribal interests: the US Department of Agriculture, the Department of the Interior and FERC.

Tribes President Joseph Parker said Tuesday the tribes have not been brought into the conversation about the Riverside bid at all. “I don’t know anything about their water district down there,” he said in a phone interview. Asked whether anyone from the Riverside water district, PG&E or any federal agency had contacted the tribes about the bid, Parker said: “No. Nothing.” Asked what he wanted readers to understand, he said: “Like I’ve been saying, the dams are coming down. PG&E or some other way, the dams are coming down.”

That answer means no one — not USDA, not Interior, not the Riverside district’s board, not the Trump administration — has begun the consultation that federal trust doctrine would require before any acquisition of any project feature could legitimately move forward. Whatever is happening between Washington and Riverside County, the sovereign nation whose rights are most directly at stake hasn’t gotten a phone call.

A bid from 600 miles away

The Elsinore Valley Municipal Water District, the agency the Trump administration named last week as a potential buyer, declined Monday to say whether power-generation components are part of its interest. District spokesperson Sylvia Ornelas called the deal “a potential infrastructure and supply acquisition” and said the district was “limited in what we can share at this time.”

Two phrases in her reply do the work. The first — infrastructure and supply acquisition” — puts infrastructure first. That maps onto the only path PG&E left open: water-conveyance features, not the license. 

Then there’s the tell from a sitting board member. A week before Ornelas barely answered questions, the water district’s Vice President Darcy Burke publicly cited the “potential energy benefits” of the Potter Valley Project and noted that its powerhouse “once had the capacity to generate 9.4 megawatts.” A board member named the project’s electricity generation as part of what the district is interested in. The district’s communications office declined to address the natural follow-up. Burke didn’t respond to direct questions sent Monday morning.

What do they actually want?

Probably the same thing they’ve been after for two decades. Pumped-storage hydropower.

Pumped storage works as a giant battery: pump water uphill at night when power is cheap, release it back downhill through turbines during the afternoon peak. The economics depend on the height difference between two reservoirs.

Elsinore’s water district has been chasing a pumped-storage project on its own turf since the early 2000s — the Lake Elsinore Advanced Pumped Storage Project, or LEAPS. Federal regulators have rejected the application four times, the last one in May 2023. The private company pushing it, Nevada Hydro Company, was bought in 2022 by a California-based outfit called Bluewater Renewable Energy Storage Project, which inherited what was left.

Elsinore says it has no current relationship with either company. But Ornelas disclosed Monday — for the first time publicly — that the district had a contractual relationship with Nevada Hydro tied to an earlier LEAPS application, that the parties wound it up in a 2018 settlement, and that the settlement contains “limited provisions should a successor entity pursue a separate FERC application in the future.”

Bluewater is the textbook successor entity that clause was written to address. The district has not released the settlement; the Voice has filed a public-records request for it.

Why does any of this matter for Potter Valley? LEAPS keeps failing because Nevada Hydro can’t get the federal land permissions it needs to build a new upper reservoir in the Cleveland National Forest. The Potter Valley Project doesn’t have that problem. It’s already federally licensed. It has two reservoirs at different elevations, connected by a tunnel through a mountain. The Forest Service questions Nevada Hydro couldn’t answer for LEAPS were answered for Potter Valley a hundred years ago.

That’s why a Southern California water district with a long pumped-storage interest might be looking at a Mendocino County hydropower complex 600 miles from home.

A broken powerhouse, a derated dam

What would the district actually be buying? Less than it might sound.

The Potter Valley powerhouse hasn’t generated electricity since June 2021. PG&E first estimated an 18-to-24-month, $10-million transformer replacement. In February 2022, the utility committed to going ahead; in April 2023 it reversed course. The project will not produce another watt under PG&E. In the same period, the California Division of Safety of Dams approved a permanent opening of Scott Dam’s spillway gates after a seismic analysis by Gannett Fleming changed the dam’s condition rating from “Satisfactory” to “Fair.” Lake Pillsbury’s storage capacity has been cut by roughly 25 percent — about 20,000 acre-feet.

A water district acquiring Potter Valley as a passive water-supply purchase would be buying a non-functioning powerhouse and a structurally derated dam. A district acquiring it for the head differential between Lake Pillsbury and Van Arsdale Reservoir — the kind of asset a pumped-storage operator values — would be buying something different.

There’s also no pipe between the Eel River and Lake Elsinore. There is no plausible way for Eel River water itself to reach Riverside County. Any Southern California buyer of a North Coast water project would have to lean on paper-water moves — trades, exchanges, banking — to make the acquisition mean anything for ratepayers 600 miles away. Or it would have to be interested in something other than the water.

What does Elsinore Valley water district’s own house look like?

The water district’s customers in Riverside County are watching their bills rise to fund roughly $500 million in capital projects already underway, including a $102 million PFAS-treatment facility for contaminated groundwater. A district in that posture chasing a 600-mile-away water acquisition is doing something that might be deemed unusual.

Board VP Burke has been candid about the strategy in other venues. In an April 23 interview on the AmericaUnwon podcast, she said the board’s plan was to “explore new water sources and go big and bold,” citing as a precedent example a multi-agency ocean-desalination project at Camp Pendleton modeled at $8,300 an acre-foot. She also said the board is willing to “trade,” “exchange” or “bank” water rights to keep its customers supplied.

That’s the public face of the strategy. Trades and exchanges only buy ratepayers water if there’s existing infrastructure to move it. Between the Eel River and Riverside County, there isn’t. Which puts the energy use case back near the center of the picture.

What is Washington actually doing?

The other open question is what legal lever the Trump administration has in this fight. PG&E owns the license. FERC has jurisdiction over the surrender proceeding and the eventual decommissioning. The tribes hold (or will hold) the water rights. The State of California regulates water transfers, place of use, dam safety and water-quality certifications.

USDA’s December 19, 2025 letter to FERC and its formal notice of intervention give the administration standing to file briefs in the docket. They don’t give it authority to dictate the outcome. Secretary of Agriculture Brooke Rollins’s April 22 announcement that the Elsinore district is a “legitimate buyer” added political pressure, not legal substance, to a process that doesn’t turn on political pressure.

For an outside buyer to actually get anywhere, four things would have to be true. None is.

• PG&E has to agree to sell. It says it has not received a proposal.

• The hydropower license has to be transferable. PG&E says that path closed years ago.

• The Eel River water rights have to be available. They revert to the Round Valley Indian Tribes by binding agreement.

The Elsinore water district has to find legal authority to run a federal hydropower complex 600 miles outside its service area. California water-district statutes don’t contemplate it.

Huffman’s read of the same picture, in his April 22 statement, was less restrained. He called it “a massive water grab” and said Trump “sees this as a way to troll liberals in Northern California like me and Governor Gavin Newsom.” He pointed to the administration’s earlier statements about water — “him talking about opening a magic spigot from the Northwest that was supposed to deliver water to put out the Los Angeles fires” — and added, “Trump has shown us time and again that he has no idea how our water system works.”

Huffman announced he was opening a formal investigation. The questions, in his words: “exactly who is behind this water scheme, everyone who’s involved, and also the full scope of their scheme. And who is paying for it.” His stated goal: “to make sure that not one drop of our North Coast water is sold off and shipped to Southern California.”

Which leaves the larger question — what is the administration trying to accomplish here? A real bid that doesn’t have any of the legal pieces it would need? Or political theater aimed at a different audience?

What’s next

PG&E’s final decommissioning plan is due at FERC in July. The Mendocino County Board of Supervisors approved $500,000 in February for the Inland Water and Power Commission’s continued work on the local transition. Huffman’s investigation, Burke’s response to the questions sent Monday, and the records request for the 2018 Elsinore Valley Municipal Water District–Nevada Hydro settlement will appear in Part 2.

At Scott Dam, the gates are still open. The lake keeps draining.