LAKE ELSINORE -- The local water district has filed a formal application with the Federal Energy Regulatory Commission to build a hydroelectric power plant and high-voltage transmission lines in the hills west of Lake Elsinore, federal officials said Wednesday.

With the agency's acceptance of the Elsinore Valley Municipal Water District's application, the water district may move forward with the process of getting the project approved, a commission official said.

However, the commission's acceptance of the application does not imply its approval of the multimillion dollar project, said the agency's spokeswoman Celeste Miller.

"This is the very beginning of the process, and there will be numerous opportunities for the public to be involved," Miller said.

In accepting the application, the commission gave the district two years to complete an environmental review and other studies on the project.

The district had filed a preliminary application with the commission in February 2001 to build the $470 million hydroelectric plant. Plans also call for $180 million in associated high-voltage transmission lines that would carry the plant's energy to the state power grid -- lines that would also serve as a major power link between Riverside and San Diego counties.

In the preliminary application, the commission granted the district three years for initial project studies and review. During that period, commission rules barred any consideration of similar proposals by other potential applicants.

However, as a formal applicant -- and with time having run out on the preliminary application -- the water district is no longer entitled to the same exclusivity, Miller said. Other entities may now submit preliminary or formal permit applications, each of which will be considered on its own merits, she said.

The district's plan calls for the creation of the Lake Elsinore Advanced Pumping Station, which would pump water uphill from the lake at night when electricity rates are cheaper, then store the water in a reservoir. It would release the water to flow downhill during the daytime, powering electricity-generating turbines.

The water district would benefit from selling the generated power during more expensive, peak-demand periods during the day. District officials say they could reap more than $1 million a year in revenues from power sales.

The proposal has met with intense opposition since its inception in the mid-1990s. Homeowners in the hillside communities west of the lake have blasted it, citing environmental, fire and aesthetic concerns. The water district has denied that the project will cause those problems.

One person who has objected strongly to the project was incredulous Wednesday with the news of the federal agency's acceptance of the formal application.

"I am shocked," said Elin Motherhead, secretary for Friends of the Forest and the Santa Rosa Plateau. "(The application) was so flawed, with so few studies and promises to do them in the future at the same time -- studies that should have been completed before FERC ever accepted the formal application."

Some have also protested the district spending ratepayers' money for a project that may never be built. Since the mid-1990s, the board has spent about $1.4 million on studies, consultants and other costs on the project. That includes about $240,000 between late 2002 and late 2003 to enlist the help of two Washington lobbyists in obtaining federal approval of the hydropower project.

"I think they are just digging themselves in a hole," Motherhead said. "There is no way that if this project fails, they are going to recoup that money. This is a very irresponsible expenditure of ratepayers' (dollars.)"

Much of the money spent to date has come from the water district, with a commitment from its private partner in the project, Vista-based Nevada Hydro Co., to repay the district, once the project is approved.

Board President Ben Wicke said Wednesday that he is confident the project will be approved, "and that we are going to get our money back."

Residents should keep in mind, he said, that the pump storage project is five to seven years away from being operational.

"A lot is going to change between now and then in the power-generation needs of the state of California," he said.

Even water district board members have conflicting opinions on the project's benefits vs. its risks. Two board members, Chris Hyland and George Alongi, have come out against the project. Wicke and Kris Anderson support it. The fifth board member, Phil Williams, says he is waiting to see what the studies show.

If the water district and Nevada Hydro successfully complete the required steps in two years, the federal agency could issue its final decision on the project in April 2006, Miller said. But adjustments may be required along the way, she added.

Still necessary, Miller said, are extensive environmental studies and reviews, and a thorough analysis of all documents -- all with ample input from the public and other relevant agencies.

In its acceptance notification, dated Feb. 11, the commission noted that "the application is not ready for environmental analysis at this time."

In December, an environmental scientist with the California Water Resources Control Board slammed the water district's preliminary application as "patently deficient" for failing to conduct all the necessary environmental studies on the project's possible effects on water quality. In a letter to the federal commission, senior environmental scientist Jim Canaday urged officials to deny the water district's formal application, based on those deficiencies.

Earlier this week, however, Canaday said he was not surprised the federal agency had accepted the water district's formal application.

"This is a natural part of the process," Canaday said. "FERC is probably going to issue them additional information requests which will mirror very closely what our agency has asked and what other agencies have asked as well," Canaday said.

He added that he had a recent phone conference with water district officials in which they assured him that the necessary water-quality studies would be completed.

Water board member Williams said Wednesday that he sees the formal application as just one more step in the process, with many more steps yet to come.

"They are going to give us a whole laundry list of items to comply with, including public hearings and environmental reports, giving us a time frame to complete them" in order to get the permit, Williams said.

Even if the water district gets federal approval for the project, however, it still must locate an investor with deep pockets. Water district spokesman Greg Morrison said that as the district gets closer to receiving federal approval of its application, that search should grow easier.

"What's easier to sell, a piece of raw land or a piece of land that's graded and ready to build a house on?" Morrison asked. "That's the case with this project right now; we still have a fairly raw piece of land."

Contact staff writer William Finn Bennett at (909) 676-4315, Ext. 2624, or wbennett@californian.com.