August 14, 2018 Via Electronic Mail The Honorable Toni Atkins, President pro Tempore California State Senate Sacramento, CA 95814 The Honorable Anthony Rendon, Speaker California State Assembly Sacramento, CA 95814 RE: AB 2787 (Quirk) – OPPOSE Dear Senate President Atkins and Assembly Speaker Rendon: On behalf of the undersigned organizations, representing more than one million members and supporters in California, we are writing to oppose AB 2787. This bill would force the California Independent System Operation (CAISO) to procure large scale pumped hydro energy storage, and it would allocate costs to ratepayers through the transmission access charge (TAC). While our organizations support energy storage projects because they can provide a grid benefit by complementing intermittent renewable resources such as wind and solar, we do oppose legislation that has been introduced solely to breathe new life into one specific, dying, controversial, and environmentally damaging pumped storage hydro project in the California desert: The Eagle Crest Pumped Storage Project. Further, we question the policy of shifting pumped hydroelectric procurement to the CAISO as it potentially represents a blank check to project developers from ratepayers, with no requirement for cost-benefit analysis or ratepayer accountability. Currently, the California Public Utilities Commission (CPUC) System Reference Plan for 2030 does not call for any pumped storage hydro projects. The CPUC found that pumped hydro increases costs for ratepayers, compared to other grid integration solutions such as greater access to regional renewables, battery storage, or strategic curtailment. AB 2787 rejects the current conclusion of the CPUC to look to other grid solutions and would force CAISO to procure storage projects totally between 1,000 and 2,000 megawatts (MW), and shift project costs to ratepayers by categorizing these projects as a transmission asset. While there are other smaller pumped hydroelectric projects proposed in California,1 and many proposed battery storage projects, this bill’s directive of producing up to 2,000 MW of “long duration bulk storage” “that has the capability to discharge at its capacity continuously for at least eight hours and cycle through its discharge and charge cycle on a daily basis” by December 31, 2019 is clearly aimed at revitalizing the defunct Eagle Crest Pumped Storage Project.2 The Eagle Crest Pumped Storage Project (Project), located adjacent to Joshua Tree National Park, is a massive 1300 MW hydroelectric storage facility that proposes to pump enormous amounts of groundwater from the Chuckwalla aquifer in an area renowned for its resources and history. In fact, the National Park Service has determined this landscape of such important wildlife habitat and rich mining history that it is worthy of inclusion in Joshua Tree National Park. This Eagle Crest Project threatens Joshua Tree National Park and surrounding lands and wildlife. Groundwater studies commissioned by the National Park Service concluded that contrary to what the project proponents claim, this project would overdraft the desert aquifer underlying Joshua Tree National Park.3 The Park Service concluded that Eagle Crest “would cause damaging overdraft conditions” by pumping thousands of acre feet of water from an already over-drafted desert aquifer. With no groundwater research completed by the State, the National Park Service research serves as the most reliable, independent science. The project proponents claim that their project will not harm the desert aquifer because the aquifer’s recharge rage is 13,000 acre-feet per year (AFY), but the Park Service’s research estimates the aquifer recharge rate is only 3,000-6,000 acre-feet per year (AFY): a fraction of the project proponent’s claimed recharge rate. The project’s long-term over-drafting of the aquifer would likely affect groundwater-dependent ecosystems and regional springs that sustain protected wildlife and may preclude or restrict future renewable projects planned for the Riverside East solar zone, hindering California’s efforts to increase its renewable portfolio. This kind of groundwater mining would be in violation of State policy and Federal land use plans, including the Desert Renewable Energy Conservation Plan (DRECP). For these reasons, our organizations have strenuously opposed this project over the last several years because it puts human and ecological communities in the region surrounding Joshua Tree National Park at significant risk from damaging overdraft conditions. Not only is this project environmentally destructive, but California energy regulators have concluded that this project is unnecessary for California’s clean energy future and too expensive for ratepayers. The California Public Utilities Commission (CPUC) found that pumped hydro increases costs for ratepayers, compared to other grid integration solutions such as greater access to regional renewables, battery storage, or strategic curtailment. In fact, no pumped storage is called for in the CPUC’s System Reference Plan for 2030. Further, CAISO’s 2017 Transmission Policy Plan (TPP) modeling found that Eagle Crest “did not significantly reduce any of the identified [transmission] congestion.” This means the project is in the wrong place to provide locational transmission benefits San Vicente (500 MW San Diego County), Lake Elsinore (500 MW in Riverside County), and Lake Hodges (50 MW in San Diego County). 2 Since an “eight hour continuous discharge” requirement is not necessary for grid balancing and since most battery storage projects cannot meet such a discharge requirement, it appears that this requirement was included in the bill solely to ensure that the only project type that would qualify would be a pumped hydroelectric project. 3 See Protest of CDCA Plan Amendment for Eagle Crest Energy Gen-Tie and Water Pipeline, filed by Stanford Environmental Law Clinic June 1, 2017. 1 or help to relieve transmission congestion, which is one of the most important elements of any storage project to aid with renewable integration. Considering the findings by the CPUC and CAISO, not surprisingly, this project is failing. There are no purchasers for its energy. Further, the project lost its Federal Energy Regulatory Commission (FERC) license in June 2018, and FERC has no legal authority to renew this license. Finally, it is worth noting that while project proponents tout this project as a “clean energy” project, this project has no legal requirement to use renewable energy. Indeed, it will consume more energy than it produces while being allowed to be powered 100% by fossil fuel. Besides our strong opposition to the Eagle Crest Project, we also question AB 2787’s change in established CAISO practice by directing procurement of pumped storage and classifying these projects as a transmission asset. In 2017, the CPUC concluded that pumped hydro increases costs to ratepayers across all scenarios and it would not provide sufficient gird integration benefits. We believe that it is important to develop new methods to implement energy storage to integrate excess renewable energy during over-generation events, but AB 2787 would change the current treatment of storage projects by the CPUC and CAISO. Such a change in established policy and practice should be discussed in the regular order of legislative business where the public and policy experts will have an opportunity to fully discuss and consider the impacts of this bill instead of through a last minute “gut and amend” of a bill without any committee analysis or hearings. For the reasons discussed above, we strongly oppose this bill and urge that it not move forward at the end of this legislative session. We would be happy to discuss this matter further if you have any questions or concerns. Thank you for the opportunity to provide our perspective on this important matter. Sincerely, Kim Delfino California Director Defenders of Wildlife Neal Desai Pacific Region Field Director National Parks Conservation Association Lisa Belenky Senior Attorney Center for Biological Diversity Ryan Henson Policy Director California Wilderness Coalition Kate Hoit California Director Vet Voice Foundation Greg Suba Conservation Director California Native Plant Society Edward Moreno Policy Advocate Sierra Club California. Juan Altamirano Associate Director of Policy Audubon California