Lyons Dam

Lyon Dam

Tuolumne Utilities District efforts to acquire water rights and infrastructure from Pacific Gas and Electric Co. were slowed by the coronavirus pandemic in 2020, but TUD’s general manager said Tuesday that negotiations with the utility giant are “still on track,” and he is optimistic an agreement could be reached this year.

Leaders of TUD, the water-and-sewer agency that serves more than 40,000 Tuolumne County residents, are currently in what they describe as exclusive negotiations with PG&E to acquire water rights, Pinecrest and Lyons reservoirs, the Tuolumne Main Canal flumes and ditches, and Phoenix hydropower facilities.

“COVID really slowed things down,” Ed Pattison, hired as TUD GM in October 2019, said Tuesday in a phone interview. “The PG&E bankruptcy slowed things down. Part of the issue is we couldn’t meet in person.”

District staff have mounted a public awareness campaign dubbed TuoCo: Our Water, Our Future to “educate ratepayers, landowners and stakeholders about the opportunity to secure reliable water supplies to benefit Tuolumne County residents.” Part of that effort included an April 9 town hall meeting at Sonora Opera Hall, which had to be postponed without rescheduling, due to the COVID-19 pandemic.

“Everything is still on track,” Pattison said Tuesday. “I think we’re optimistic. We can hold a town hall meeting this spring. It depends on the vaccinations, how safe it will be to meet at the Sonora Opera Hall and get a couple hundred people out.”

Pattison referred to the TuoCo: Our Water, Our Future website. He said the website summarizes all the information TUD can share with the public.

“We hope by spring we can go out and hold a public town hall and answer people’s questions,” he said. “And we’re hopeful we can reach an agreement in 2021.”

Any agreement reached between TUD and PG&E this year likely will not be “the complete agreement,” Pattison said. He also said TUD still cannot disclose what he called confidential real estate negotiations, including a term sheet executed with PG&E last year that legally puts TUD and PG&E in mutually exclusive negotiations for TUD to acquire Pinecrest, Lyons, the Tuolumne Main Canal, and Phoenix Powerhouse.

Terms of a partial agreement could become a public document if that happens this year, Pattison said.

Pattison, TUD veteran staff and the elected board of directors view the local agency’s potential acquisition of water rights and reservoirs as a “once-in-a-lifetime opportunity” for the county to secure its own water system for the first time in its 170-year history. The county was founded in 1850, the same year California attained statehood.

“We don’t believe we can afford not to own this system,” Pattison told The Union Democrat newspaper in March, when TUD announced its negotiations with PG&E.

The Phoenix Hydroelectric Project, which includes Pinecrest, Lyons and the Tuolumne Main Canal, is owned and operated by PG&E in the South Fork Stanislaus River watershed, between Long Barn and Sonora, at the east end of the TUD-owned Tuolumne Water System.

Under the proposed agreement with PG&E, the district would acquire the Phoenix Powerhouse, Tuolumne Main Canal, pre-1914 and post-1914 water rights on the South Fork Stanislaus River, Lyons Dam and Lyons Reservoir, as well as Strawberry Dam and Pinecrest Reservoir.

PG&E emerged from Chapter 11 bankruptcy on July 1, with a plan to fund a fire victims trust with $5.4 billion in cash and common stock representing more than 22 percent of ownership in PG&E Corporation.

The utility, its equipment, and its power line maintenance contractors have been found at fault in multiple deadly, destructive megablazes in recent years, including the 2015 Butte Fire that burned 110 square miles, destroyed more than 800 homes and other buildings, and contributed to the deaths of two residents in Calaveras County.

In December 2019, PG&E proposed to settle all claims from the 2015 Butte Fire; the December 2016 Ghost Ship warehouse fire that resulted in 36 deaths in Oakland; the October 2017 Tubbs Fire that burned more than 5,600 structures and killed at least 22 people in Wine Country; and the November 2018 Camp Fire that destroyed 18,800 buildings and killed at least 85 people in Butte County, for a total of $13.5 billion. The offer was intended to help the utility avoid bankruptcy, which happened anyway.As a result of the Chapter 11 proceedings that ended July 1, PG&E stated publicly it “has retired expensive, high-coupon debt and replaced it with lower-cost debt, yielding significant annual savings for customers over the duration of the debt, estimated to be approximately $250 million annually.”

TUD has an existing 1983 contract with PG&E to provide the water supply for the district from the South Fork Stanislaus River. This water is stored in Pinecrest, Lyons and Phoenix reservoirs, and other small reservoirs on the TUD ditch system.

Earlier this week, Pattison said through a TUD spokesperson about negotiations with PG&E, “We are optimistic about a successful outcome for TUD and Tuolumne County to secure valuable water rights and enhance water supply reliability and hope to bring an agreement to the TUD Board for approval this upcoming year.”

According to the public awareness campaign website created by TUD, the district and PG&E are working to determine terms of the potential transfer agreement. It could take two to three years to complete negotiations, obtain required regulatory approvals from federal and state regulators, and transfer assets from PG&E to TUD.

For more information, visit online.

Contact Guy McCarthy at or (209) 770-0405. Follow him on Twitter at @GuyMcCarthy.

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