On March 10, the El Dorado Irrigation District Board of Directors, on a split vote, approved a power connection agreement with PG&E for a mini-hydro project that will substitute a generator for a pump in a pipeline serving Water Tank 7.
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The net income from the project will depend on which method of power sale is chosen. One method will produce $4 million in income over 30 years with a 14- to 15-year break-even point. An alternate method would produce $2 million in net income over 30 years with a 13- to 14-year payoff period. Both of these figures don’t count funds already expended on engineering consultation and capitalized staff time. The $550,000 in already expended funds included a $182,000 grant from the El Dorado County Water Agency.
The net income is an estimate and traditionally income is estimated conservatively. It is that conservatism that caused Board President Alan Day to call the cash flow “pretty thin” and Director Greg Prada to say, “The math on this is too extended.”
We can understand their trepidation, but we call it short-sighted as well as penny-wise and pound foolish.
When EID bought Project 184 from PG&E in 1999, there were similar arguments over money, with those who had no vision for the future wanting to give up the powerhouse and run it as a water project only. Now that powerhouse, except in an extreme drought year, produces an average of $8 million a year.
“We teach children to save their money. As an attempt to counteract thoughtless and selfish expenditure, that has value. But it is not positive; it does not lead the child into the safe and useful avenues of self-expression or self-expenditure. To teach a child to invest and use is better than to teach him to save.” — Henry Ford, “My Life and Work”
Director Dale Coco said it best: “This is exactly the project we need to maintain our rates. The second largest cost of operation is energy.”
Director George Osborne pointed out that the payback period for the solar panels installed at the El Dorado Hills Wastewater Treatment Plant was projected to be paid off in 13-15 years, but it paid for itself in eight years. That solar array cuts $300,000 off the cost of electricity for the El Dorado Hills plant. That is not extended math or thin cash flow.
And Project 184? If that old board had got away with abandoning the power license, EID not only would have lost a revenue source that defrays the cost of delivering water from the four alpine reservoirs, but it would have lost the water rights attached to that hydro license. Now that a severe drought is upon us, it would have lacked the infrastructure to help fill Sly Park’s Jenkinson Lake when rainfall alone won’t do it.
We appreciate the attention to the district’s bottom line, but don’t lose sight of a vision for the future.