Treasurer calls for city to stand up to hydro plant proposal

By: JOSE CARVAJAL - Staff Writer | Wednesday, January 3, 2007 9:40 PM PST ∞

LAKE ELSINORE -- City Treasurer Pete Weber is calling for the city to formally oppose a local water district's plan to build a hydroelectric power plant, saying that the city will ultimately have to pick up the pieces if the project proves to be an economic boondoggle.

The billion-dollar project's economic viability is something that its outspoken opponents have questioned in recent months. And while other city officials are taking a wait-and-see approach to the project, Weber is the first to voice his opposition.

In a memo addressed to the City Council and dated last Saturday, he said that his projections show the plant's annual operating costs outweighing its annual revenues by hundreds of millions of dollars. If that holds true, he said, the plant will have to be shut down shortly after opening because of such heavy losses.

"This could leave the city of Lake Elsinore with part or all of the burden of razing the power plant and restoring the affected properties, including the lake, to a condition acceptable to our community," Weber wrote in the memo.

On Wednesday, Weber said he came up with his projections while conducting an analysis of the project's economics over the weekend. He based the projections on figures provided in a report last year by the Federal Energy Regulatory Commission.

The commission is considering whether to grant the Elsinore Valley Municipal Water District and its private partner a license to build the project. A key report by federal administrators is expected to be released this month and the commission could decide on the proposal as early as late spring.

In response to Weber's memo, water district spokesman Greg Morrison disagreed with Weber's contention that the project is not economically viable. He pointed out that the treasurer based his assumptions on figures provided by the energy commission in February of last year. Those are likely to change when the commission revises the numbers in the coming report, he said.

Some of Weber's projections, he said, appear not to be based on any reliable information.

"We see no justification for those numbers," Morrison said. "We don't know where those came from."

The district has been involved in the effort to build the hydro plant, known as the Lake Elsinore Advanced Pumped Storage project, for more than a decade. It would be built in the hills southwest of the lake and would be linked to the state power grid by a 30-mile high-voltage transmission line that would run partly through the Cleveland National Forest.

The project calls for water to be pumped from the lake up the hills at night when power is less expensive and to be stored in a 100-acre reservoir behind a 180-foot dam in either Decker or Morrell Canyon. The water would flow down toward the lake during the day to energize turbines in an underground powerhouse.

While opponents see the project as a threat to the environment and to property values, proponents see it as having positive economic benefits by ensuring the lake is always full and providing up to 500 megawatts of much-needed electricity to the region.

The district and its partner, The Nevada Hydro Co. of Vista, plan to sell the project once a license is granted by the energy commission. The buyer would be responsible for building and operating the project.

Several members of the City Council had not yet received Weber's memo by Wednesday.

According to Councilman Thomas Buckley, the city doesn't have much of a role in the project. The city won't be asked to sign off on it and can only step in if it wants to attempt to stop it, he said.

There's no reason for the city to step in yet, he said.

Only when the project's proponents approach the city about building parts of it in town, Buckley said, city officials will decide how they want to proceed. But right now, he said, it should continue to take a wait-and-see approach.

He also said that if Weber's economic analysis is spot on, potential investors will take notice. Nobody will invest in it in that case, he said, and the project won't be built.

-- Contact staff writer Jose Carvajal at (951) 676-4315, Ext. 2624, or jcarvajal@californian.com. Comment at http://www.californian.com.

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