REPORT TO COUNCIL
SUBJECT
Title
Action Authorizing the Submittal of an Application to FERC to Surrender the High Line Canal Hydroelectric Project Hydroelectric License, and Authorizing the City Manager to Complete Related Administrative Actions
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
In 1984, the Federal Energy Regulatory Commission (FERC) issued a license to the City of Santa Clara (City) to construct and operate the High Line Canal Hydroelectric Project (High Line) located near Orland, California. High Line was completed in 1989 with a capacity of 0.53 MW at an installed cost of about $1 million.
Due to frequent and recurrent operational issues, High Line has been in an inoperable state since May 2020. Staff has evaluated High Line’s condition, reviewed historical generation output, and performed a financial analysis to determine repair costs and project future revenues. The resulting studies have concluded that repairing and operating High Line is no longer financially viable and therefore, staff is planning to begin the process of FERC license surrender and facility decommissioning.
DISCUSSION
As the sole licensee for the High Line Canal Project, FERC No. 7252-CA, the City is subject to numerous FERC hydroelectric license conditions and regulatory requirements. Of note, 18 CFR § 6.4 states that if generation from the project is “discontinued for a period of three years”, FERC will deem it to be the intent of the licensee to surrender the license, and not less than 90 days after public notice, may at its discretion terminate the license.
Under normal operation, High Line results in a net loss to the City and the estimated repair costs exceed several years of generation revenue. Repair strategies have historically been unsuccessful, and it is unlikely that reliable operation could be achieved without major design changes to the facility. Additionally, remote facilities like High Line have unique regulatory compliance and other risks that have increased in the recent past and which cannot be justified for a facility with such limited value to the City.
Therefore, staff has determined that High Line is no longer economically viable and carries an unacceptable level of risk. Staff is recommending that the City authorize the submission of an application to FERC to surrender the hydroelectric license which, if approved, will require the restoration of the land to pre-project condition, which will require a separate contract subject to City Council approval.
After the application to surrender the hydroelectric license is submitted to FERC, it will likely be necessary for the City to prepare and submit documents to the California Independent System Operator (CAISO), the Bureau of Reclamation, Orland Unit Water Users Association, and others.
The proposed action does not authorize any work on the High Line property, such as demolition, as staff currently is assessing the facility and surrounding land restoration requirements and associated costs. Once FERC has approved the request to surrender the hydroelectric license and decommission the facility, staff will work with the various agencies to determine an estimate of decommissioning-related costs. If required, staff will return to the City Council at a future date with a recommendation regarding the actual work necessary to decommission the facility and to request the City Council appropriate necessary funds.
ENVIRONMENTAL REVIEW
This action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(5) of Title 14 of California Code of Regulations in that it solely authorizes administrative actions which will not result in direct or indirect physical changes in the environment.
FISCAL IMPACT
There is no fiscal impact related to submitting the Application to Surrender the hydroelectric license with FERC. Costs of professional services such as attorney services are budgeted in SVP’s operating budget. Costs associated with decommissioning the facility will be brought forward to the City Council at a later date as required to appropriate the necessary funds.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Authorize the City Manager or designee to take any necessary administrative actions to surrender the Federal Energy Regulatory Commission (FERC) hydroelectric license for the High Line Canal Hydroelectric Project, including, the execution of any documents as may be required by the FERC, California Independent System Operator (CAISO), Pacific Gas & Electric (PG&E), the Bureau of Reclamation, Orland Unit Water Users Association, and other agencies and entities, subject to the approval as to form by the City Attorney, if applicable.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager