Formation of Trinity Public Utilities District
and Important Milestones for the District
In the early 1950’s legislation to build Trinity Dam was gaining traction in the United States Congress. The Central Valley Project, as it existed at the time, was already oversubscribed in terms of commitments to deliver more water than the Project actually had. It was well recognized that roughly 2 million acre-feet of precipitation fell annually above Lewiston and that the watershed was very sparsely populated. This sparse population implied that any opposition to a new dam and diversion of most of this water to the Sacramento River might be easily overcome.
There was discussion of allowing Pacific Gas & Electric Company (PG&E) to construct and own the electric power generation at Trinity Dam which led to a local citizen’s group traveling to Washington, D.C. to lobby congress for this federal/private partnership. Their motive was based on the tax revenue that PG&E was providing Shasta County for hydroelectric projects that PG&E had developed on the Pit River. This move to gain tax revenue was critical given the recognition that some of Trinity County’s more valuable lands would be lost if the dam was constructed.
Congress passed the Trinity River Division (TRD) Act that provided for the United States Government to build Trinity Dam. Rather than a compromise that would have allowed private PG&E development of Trinity generation, the 1955 Act reserves, in perpetuity, the first twenty-five percent of the resulting energy generated to be sold at cost for use in, and only within, Trinity County. The Act also provides for the Federal government to build those facilities necessary to deliver the power to Trinity County.
The key qualification of this mitigation is the prohibition of any financial benefit accruing to the citizens of Trinity County from any portion of the first twenty-five percent not used in the County. We can use the power but it cannot be sold or traded outside of Trinity County.
The Trinity Project was constructed and became operational. However at this time it was commonly believed that nuclear power, being developed by PG&E, would be “too cheap to meter”. Therefore, any perceived benefit to Trinity County from what was then believed to be expensive hydro power, had vanished.
Since the 1930’s, Weaverville was served by a small private electric utility known as CP National. Their electric rates were the highest in the State, much higher than PG&E’s who served the balance of the County. As a result of the Arab oil embargo and the rapidly escalating fuel adders to electric prices at that time, a group from the Weaverville Chamber of Commerce and the Trinity County Board of Supervisors formed a committee to investigate the possibility of obtaining the electric benefits promised by Congress in 1955.
As this effort was gaining momentum, Simpson Timber announced their plan to close and scrap out the sawmill in Weaverville. Another ad hoc committee was formed that convinced Simpson to keep the mill after its closure and then gained an expression of interest from the Schmidbauer family to reopen the mill.
Finally, giving into the clamor and outrage resulting from numerous rate increases, CP National with the highest rates in the State, made it known they were for sale. In order to provide an entity that could negotiate and finance the purchase, an election was held, and Trinity County Public Utilities District, now Trinity Public Utilities District (Trinity P.U.D.), was formed. E.J. Simpson was hired on contingency as a consultant. The newly elected Board managed to borrow $12,000 from the community to fund travel and to hire Bill Fleckles, a knowledgeable utility attorney. On June 30, 1982 the $2.5 million negotiated purchase of CP National facilities was concluded, funded by Bank of America’s Public Finance Department. The Western Area Power Administration (Western), which by then was marketing electric power for the U. S. Bureau of Reclamation (U.S.B.R.), and had helped the new district immeasurably as it organized, agreed to serve the new district, by way of PG&E’s transmission, and Trinity P.U.D began serving 1,500 customers.
With funds in place, Trinity P.U.D’s earliest acts were repayment of the $12,000, paying consultant, E.J. Simpson, and approving a 60% rate reduction for the sawmill.
The Trinity P.U.D. Board believed that Trinity’s right to power from the 1955 TRD Act should have been priced at a pure hydro rate, rather than at the higher melded rate as Western met its contractual commitments by augmenting its hydro resource with higher cost purchases of nuclear, coal, and other thermal generation. The Board hired a young lawyer from San Francisco, Dian Grueneich, and brought a lawsuit against the government in an effort to lower power costs to the “Trinity Hydro” rate, as promised in the 1955 TRD Act.
Eventually the 9th Circuit ruled against Trinity P.U.D. due to complex technical issues. Ultimately that young attorney would sit as a commissioner on the California Public Utilities Commission.
With the technical guidance of E.J. Simpson, the Hayfork Chamber of Commerce Electric Committee completed a feasibility study for the formation of the Hayfork Valley Public Utility District. Voters approved Measure A for the Hayfork Valley P.U.D.’s formation in June.
Hayfork Valley P.U.D. voted to file for condemnation of PG&E distribution facilities within the Hayfork water district boundary.
Hayfork Valley P.U.D. successfully condemned the PG&E distribution system in Hayfork with the help of Sacramento attorney Martin McDonough and Trinity P.U.D. The court jury set an acquisition price of $449,000.
Trinity P.U.D. negotiated the $600,000 purchase of PG&E facilities serving the remaining portion of the Weaverville basin, known as the “straight stretch” and Browns Creek.
Trinity P.U.D. entered into a $12,000,000 Settlement Agreement with PG&E, which provided for Trinity P.U.D. to acquire the Hayfork Valley P.U.D. and purchase the distribution facilities for most of Trinity County, specifically those areas served by what was then known as the Shasta Division of PG&E. Prior to this acquisition, there had been a failed attempt to form a third P.U.D. to serve Lewiston and Trinity Center.
Trinity P.U.D. began lobbying Congress to obtain a power price based on Trinity River hydro generation. Other Western customers vigorously fought this effort. By lowering Trinity P.U.D.’s cost, their costs would increase. Ultimately, with Congressman Herger’s urging that the parties develop a compromise, a Memorandum of Understanding (MOU) was reached between Trinity P.U.D., Northern California Power Agency (NCPA), and Western. The MOU provided Trinity P.U.D. nearly the same bottom line in net costs as a rate based on what generation from the waters the Trinity River would provide. The MOU did so by; 1) exempting Trinity P.U.D. from costs to restore the ecological system of the Sacramento River, 2) providing for NCPA to support the concept of Western meeting Trinity P.U.D.’s load with all hydroelectric power and dividing the remaining hydropower amongst Western customers, 4) an agreement to support legislation that would provide Trinity P.U.D. with an annual rebate from the U.S.B.R. of a little over a half a million dollars a year, funded by existing power and water customers of the Central Valley Project. The combined results of the foregoing would resulted in nearly a $1 million total annual benefit for the customers of Trinity P.U.D.
The now infamous California Deregulation Bill was unanimously approved by the State legislature. Prior to its passage, the Bill was expected to raise Trinity P.U.D.’s costs by $200,000 to $400,000 a year, yet provide no offsetting benefit. At the time of its passage, Trinity P.U.D. paid 15¢ to have $1 worth of energy delivered. Several years later, because of the Deregulation Bill, Trinity P.U.D. paid as much as 85¢ to deliver $1 worth of energy.
Congress passed the legislation for the U.S.B.R. payment to Trinity P.U.D., contemplated by the 1995 MOU, with the help of Congressman Herger.
Trinity P.U.D. became the first electric utility to qualify for funding from the California Economic Development and Infrastructure Bank. This funding enabled Trinity P.U.D. to make significant improvements in the reliability of service. Most notably, 1) replacement of a very old substation in Hayfork, 2) increase the distribution voltage north of Lewiston from 12kV to 21kV, 3) change out 1,120 poles, many of which were over 50 years old, and 4) provide redundancy for critical substation equipment.
The Trinity County Board of Supervisors announced their intention to close our only hospital due to severe financial pressure. Trinity P.U.D. recognized the impact this would have on the health of our citizens and our economy. It was felt that the loss of the only emergency room, along with 120 hospital jobs would bring untold damage. An agreement was fashioned with the County and legislation was passed in Sacramento that allowed Trinity P.U.D. to assume operational responsibility of the hospital. After a two-year transition, a new healthcare district was formed which now operates the hospital. This exemplifies the role Public Power can play in serving its citizens.
With assistance from Congressman Herger, Western was provided sufficient funding to start the design and to build those facilities necessary to deliver the power to Trinity County that was promised by Congress five decades earlier in 1955.
Western completed a new substation at the foot of Trinity Dam. This substation allowed Trinity P.U.D. to immediately connect the entire load north of the new substation directly to the generation at Trinity Dam.
Western completed construction of the new transmission line from Trinity Dam to the Weaverville Switchyard just south of Weaverville. Concurrently, Trinity P.U.D. negotiated an agreement with PG&E to purchase their 60kV transmission lines referred to as the Hayfork and Hyampom Taps. Because of these actions, Trinity P.U.D. was able to connect 97% of its load directly to the generation at Trinity Dam. The net effect is an improvement in reliability of service to Trinity P.U.D. customers and elimination of what had become nearly $1 million (and growing) in costs in exchange for a fixed debt service of less than half of that amount to fund the purchase of the PG&E facilities.
With 7,230 meters, Trinity P.U.D. serves most of the customers in Trinity County with 100% renewable hydroelectric energy. We do so through our Western contracts and by owning and operating 604 miles of power lines over rugged and mountainous terrain. The service area is sparsely populated with less than 12 customers per mile of line.
Although we have not yet reaped all of the benefits promised to Trinity County by Congress, we are over 60% there. The result is that most of Trinity County is now served with the lowest electric rates in the State, keeping more than $7 million annually in our local economy versus paying much higher private utility rates and exporting the money to stockholders. In addition, Trinity P.U.D. invests over $3 million a year on local labor, supplies, and services much of which would not be spent locally if service were provided by PG&E.
Today the challenge before Trinity P.U.D. is to maximize our power allocation for the benefit of Trinity County’s economy as promised in 1955. Economic Development must be vigorously pursued.
With a locally elected Board focused on quality and price of service, not stockholder profits, and with all of the employees being members of the community we serve, Trinity P.U.D.’s motto becomes obvious, “We are on Your Street, Not Wall Street”.