California might bail out controversial desert hydropower plant that can't get a contract

Sammy Roth | Palm Springs Desert Sun

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Eagle Crest Energy Company has been trying to build a hydroelectric power plant in the open desert east of Palm Springs, just outside Joshua Tree National Park, since the early 1990s. But the developer has struggled to find a buyer for the electricity, and environmentalists have fought the project, saying it would damage the national park.

Now the California Legislature may step in to help the developer.

With just a week left to pass bills in Sacramento this year, 10 lawmakers have signed on to Assembly Bill 2787, which would require utilities to buy energy from "pumped storage" hydropower projects like Eagle Crest's. The bill's sponsor is Eagle Crest's development partner, NextEra Energy Resources, which has given more than $200,000 to California Senate and Assembly candidates this election cycle. NextEra has given money to all three state lawmakers who represent the Coachella Valley: Eduardo Garcia, Chad Mayes and Jeff Stone. All three men signed on as coauthors of AB 2787 this week.

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The bill is moving forward through a series of procedural maneuvers, and is scheduled to be discussed publicly by lawmakers for the first time on Monday, at a meeting of the Senate's energy and utilities committee. The bill is opposed by the California Public Utilities Commission, which approved a resolution Thursday saying the legislation could force Californians to pay billions of dollars for an energy project they don't yet need.

AB 2787 doesn't mention Eagle Crest and NextEra's hydropower project by name. But the bill says utility companies must buy a total of 1,000 to 2,000 megawatts of power from pumped storage projects statewide by 2019. There are a handful of hydropower projects like that in development, but only one would satisfy the bill's requirements on its own: The 1,300-megawatt, $2.5-billion Eagle Mountain project, which would be built on land surrounded by Joshua Tree National Park, about 70 miles east of Palm Springs.

Supporters say the Eagle Mountain project would help California build more solar and wind farms, by giving utilities a place to "store" the extra energy generated by those facilities. Republican state Sen. Jeff Stone, who is now a coauthor of AB 2787, said he supports the bill because he thinks the Eagle Mountain facility needs to get built.

"If we are going to be realistic about using alternative energy and achieve 50 percent by 2030 and 100 percent by (2045), then we have to have a very diversified portfolio of alternative energy," Stone said. "And this is a perfect spot, a perfectly engineered process to generate electricity. And it will create jobs in Riverside County."

An energy project 27 years in the making

Eagle Crest Energy Company first proposed the Eagle Mountain hydropower plant in 1991. The project has overcome many hurdles since then, obtaining a federal permit despite opposition from environmentalists and acquiring the land from a company that long refused to sell. Eagle Crest would generate electricity by filling two abandoned iron mining pits with billions of gallons of groundwater pumped from the Chuckwalla Valley aquifer, which is connected to groundwater basins beneath the national park.

The project still faces two major hurdles.

First, Eagle Crest missed its construction start deadline earlier this summer. U.S. Rep. Paul Cook, a Republican from California's high desert, has introduced a bill that would allow the Federal Energy Regulatory Commission to extend the deadline until 2024.

Second, Eagle Crest hasn't been able to secure a contract for the electricity the project would generate. The bill in the California Legislature could solve that problem.

"Only one plant really fits within the description of this (bill), and it needs to be thought through a little further," said Jan Smutny-Jones, a lobbyist who leads the Independent Energy Producers Association, which represents developers of renewable energy, natural gas and energy storage projects. "Eagle Crest has been considered over 20 years, and has had a difficult time finding a market for its product. We oppose the bill."

There are only a few other big pumped storage projects being developed in California, including the 500-megawatt San Vicente facility in San Diego County, which has a preliminary federal permit, and the 500-megawatt Lake Elsinore facility in Riverside County, which was first proposed in the 1980s and recently submitted a new application to federal regulators after being rejected in 2011. Neither of those projects is nearly as far along as Eagle Mountain, which has a federal permit and site control. AB 2787 says the contracting of new pumped storage facilities must be completed by Dec. 31, 2019.

Eagle Crest has argued its project would benefit solar and wind. During the middle of the day, for instance, when solar farms often generate more electricity than the state can use, Eagle Crest would use the excess power to pump water uphill, from the lower pit to the upper pit. Then in the evening, when the sun is going down and energy demand is going up, the developer would allow water to flow back downhill to the lower pit through a turbine, generating electricity. Solar and wind farms would become more economical, and California would need fewer polluting gas plants to supply electricity in the evening.

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Stone, the Republican state senator and coauthor of AB 2787, said Eagle Mountain is such a big project that it might not get built without a guarantee from the state.

"If we truly want to see an investment of a significant amount of money to line this pit, allow it to be filled with water, have the ability to pump the water and create electricity, we've got to give a developer … surety that they're going to be able to get through a process. And I think that's what this bill does," Stone said.

"This is going to help meet our climate change goals," he added.

Supporters of AB 2787 include the environmental group Friends of the Earth and the State Building and Construction Trades Council, a politically powerful labor union. Eagle Crest has said its hydropower project would create more than 750 construction jobs.

Marc Joseph, an attorney who represents the labor union, said California will eventually need large-scale energy storage if it continues to replace fossil fuel-burning power plants, which can generate electricity around the clock, with intermittent solar and wind farms. State lawmakers passed a bill several years ago requiring 50 percent of the state's electricity to come from renewable sources by 2030, and they could pass another bill this month upping the requirement to 100 percent climate-friendly power by 2045.

"Some people will quibble about exactly which year we need (large-scale storage), but the concept of needing it is very widely accepted," Joseph said.

More than $200,000 in campaign contributions

Lawmakers from both parties have endorsed the Eagle Mountain hydropower plant.

Assemblymember Eduardo Garcia, a Democrat who represents part of the Coachella Valley, said in a statement released by Eagle Crest this month that the company's project "will assist California’s electric utilities as they work to toward meeting the state's 50 percent renewables goal." Garcia wasn't available to answer questions Thursday, but the lawmaker said in a written statement that AB 2787 would create high-paying jobs. He also said the bill "is not written in a way that is technology or project specific. "

"I firmly believe that we can align economic, environmental and public health opportunities for under-served areas, like those in my district," Garcia said. "I have been approaching these energy conversations from the lens of jobs, economic development, the environment and more importantly ensuring affordability for ratepayers."

Eagle Crest's development partner, Florida-based NextEra Energy Resources, has given $8,400 to Garcia this election cycle, more than the company has contributed to any other California lawmaker, state records show. NextEra has also given $8,000 to Chad Mayes, a Republican who represents parts of the Coachella Valley in the state Assembly, and $5,000 to Jeff Stone, who represents the valley in the state Senate.

Garcia, Mayes and Stone are coauthors of AB 2787. So are Sen. Steven Bradford and assemblymembers Autumn Burke, Sabrina Cervantes, Jim Cooper, Patrick O'Donnell, Blanca Rubio and Rudy Salas, all of whom have gotten at least $2,000 from NextEra. The bill's lead author, Bill Quirk, a Hayward Democrat, has gotten $3,000 from NextEra.

Claims about the bill's environmental benefits ring hollow to many conservationists, who say the Eagle Mountain project could do serious damage to Joshua Tree National Park.

The hydropower plant would be built on land that was used for iron mining after being carved out of Joshua Tree National Monument, the predecessor to the national park. Critics, including former Joshua Tree superintendent Mark Butler, say the industrial energy project would alter natural ecosystems, attracting predators like ravens and diminishing neighboring groundwater basins beneath the national park, which serve as a water source for springs that nourish wildlife. Conservationists worry the Eagle Mountain facility would harm species such as desert tortoises, bighorn sheep and golden eagles.

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In a letter to legislative leaders, eight groups — including Sierra Club California, Audubon California and the Vet Voice Foundation — said that while they support energy storage, they oppose legislation "that has been introduced solely to breathe new life into one specific, dying, controversial, and environmentally damaging" hydropower project.

David Lamfrom, director of California desert programs for the National Parks Conservation Association, said he's surprised that several lawmakers have lined up to help Eagle Crest despite previously claiming to support Joshua Tree National Park. Lamfrom singled out Eduardo Garcia, who also supports Cadiz Inc.'s controversial proposal to pump groundwater on land surrounded by Mojave Trails National Monument and sell it to cities. Garcia "gets a lot of credit as being a champion of the environment, but his positions when it comes to local projects are a little further afield," Lamfrom said.

"You can't wear all of the hats and then take actions that are contrary to those public positions, and be able to continue wearing those hats," Lamfrom said.

Eagle Crest and NextEra didn't respond to requests for comment for this story.

Is Eagle Crest's project economically viable?

Critics say the push for AB 2787 is a sign of Eagle Crest's desperation. The company has been unable for years to find a buyer, likely because the energy would be relatively expensive. It's also possible the pumped storage project is too big for any single utility.

"When you have these projects that are so desperate that they have to go to the Legislature to jump-start their project, those are ones that end up dying," said Kim Delfino, California program director at Defenders of Wildlife, which opposes the project.

The California Public Utilities Commission also has concerns.

The commission unanimously approved a resolution Thursday opposing AB 2787. In a public memo, commission staff said the bill would essentially pick a winner in the energy market, undermining the agency's ongoing work to determine the best and cheapest ways for California to meet its renewable energy goals. So far, commission staff said, the agency has found that Californians don't yet need pumped-storage hydropower.

The hydropower bill "would lead to substantial electric ratepayer cost increases because large bulk energy storage resources can cost in the hundreds of millions, if not billions of dollars to develop and operate long-term when other, likely more cost-effective, energy resource alternatives exist," commission staff wrote in the memo.

One environmental group publicly supporting the bill is Friends of the Earth. Damon Moglen, a senior strategic advisor at the environmental group, suggested the public utilities commission's opposition to AB 2787 may not be well grounded. He said the commission has done a poor job supporting some of the resources needed to replace fossil fuels and the Diablo Canyon nuclear power plant, including energy storage.

"The only way we're going to fight catastrophic climate change is by ramping up renewable energy. And if we're going to ramp up renewable energy, we have to ramp up energy storage. And in order to have that kind of ramp up, we need large-scale energy storage," Moglen said.

The California Independent System Operator, which runs the power grid for most of the state, has also expressed concerns with AB 2787, saying in a letter Thursday that the bill's mechanism for requiring pumped storage could be challenged by federal energy regulators. But the state grid operator, known as CAISO, is open to the idea of more pumped storage. Stephen Berberich, the grid operator's president and CEO, told The Desert Sun in a recent interview that pumped storage has several valuable attributes.

"I think what California has to decide is, do they want to put money into that technology now? That's not for me to decide," Berberich said. "As a grid operator, we love it."

Sammy Roth writes about energy and the environment for The Desert Sun. He can be reached at sammy.roth@desertsun.com, (760) 778-4622 and @Sammy_Roth.

Update: This story has been updated to reflect the changed date of a legislative hearing to discuss AB 2787.