El Dorado County Grand Jury 2013-2014 Where is the Iowa Hill Money from Smud?

The agreement was entered into as a supplement to earlier agreements between SMUD and the County in 1957 and 1961 regarding the use and operation of the Upper American River Project (UARP) for electric power and water.

In 2005, SMUD had to be re-licensed by the Federal Energy Regulation Commission (FERC) to continue operating in the UARP. Under the agreement, SMUD obtained assurances that the County and certain water agencies and districts within the County would not object to the re-licensing. SMUD would continue to plan the building of the Iowa Hill Pumped Storage project.

The County was, and is, to receive from SMUD certain different amounts of money pursuant to the agreement. The monies agreed to are as follows: $2,600,000, payable in two installments; the second installment to be paid not later than August 1, 2012 (already paid) $590,000 per year after issuance of the new license (already paid). $250,000 upon SMUD issuing a “Notice of Intention to Proceed” with the Iowa Hill project. $50,000 per year after the issuance of the “Notice to Proceed.” An amount not to exceed $2,000,000 for socioeconomic impacts of the building of the Iowa Hill project; such money not to be paid prior to construction.

The County has received payments under items 3a and 3b above, but as SMUD has not issued a Notice of Intention to Proceed with the Iowa Hill Development, no funds have been paid under items 3c, 3d, and 3e.

The agreement describes, relative to items 3 and 4 above, to whom and on what such monies should be spent. Section 4.4 of the contract addresses those issues with the following language: “SMUD’s payment as described in Section 4.3 are to be utilized by the County in order to minimize, avoid, or mitigate socioeconomic impacts attributable to the construction of the Iowa Hill Development within those areas of the County affected by such construction. The determination of which specific uses of payments by SMUD under Article IV and consistent with the limitations of the Section are to be made by the County in its sole discretion.” EVALUATION OF FINDINGS Because the monies under items 3c and 3d have not yet been paid, but presumably will be paid, the Grand Jury believes it is important to render its opinion as to the meaning of the quoted contract language above to help avoid confusion after the project has been constructed and the socioeconomic impact monies are to be distributed. The Grand Jury understands that all sentences within a contract have meaning and importance. This leads to the conclusion that the agreement does not simply call for the County to spend this money in any way it sees fit as some have suggested. This sole discretion language is clearly tempered by the sentence indicating that the money is to recompense for socioeconomic impacts within the affected area. Iowa Hill is within the Camino/Apple Hill area of El Dorado County. The Grand Jury understands that no funds have been paid relative to item 3e above, and no funds will be paid until after completion of construction and assessment of socio economic impact pursuant to Exhibit I of the El Dorado-SMUD Cooperation Agreement. At that time an amount up to $2,000,000 will be paid by SMUD to the County for the socioeconomic impacts of the construction of the Iowa Hill project.