Federal regulators late last month rejected a Riverside County water district's bid to insert itself into PG&E's plan to remove two aging dams on the Eel River — a deal North Bay tribes, farmers and environmentalists spent years negotiating, and one whose diverted water still reaches taps from Ukiah to Healdsburg.

The Potter Valley Project is a century-old, mostly defunct hydroelectric system that captures Eel River water behind Scott and Cape Horn dams and pipes a share of it through a tunnel into the headwaters of the Russian River — the drinking-and-irrigation supply for much of Sonoma and Mendocino counties. PG&E wants out, and a hard-won 2025 framework would take the dams down while preserving some diversion to the Russian River. But with a federal comment deadline set for Sept. 18, a Southern California agency and the Trump administration have turned a regional water compromise into a national fight — one whose outcome lands squarely on North Bay water users.

The reasons PG&E wants out are almost boringly practical. The utility's Potter Valley powerhouse has sat offline since 2021, its 9.2-megawatt capacity amounting to about 0.1% of the company's output, and PG&E says it has been operating the dams at a loss of roughly $1 million a year. A pandemic-era inspection turned up a repair that could run up to $15 million on a plant that powered barely 750 homes, KQED reported. When no buyer materialized, the company filed an application with federal regulators in July 2025 (external source, opens in a new tab) to surrender its license and take the project apart.

Doing so would leave the Eel — California's third-longest river — running free from its headwaters for the first time since Scott Dam created Lake Pillsbury in 1922, reopening some 300 square miles of habitat for collapsed salmon and steelhead runs. It would also end, in its present form, a diversion that since 1908 has pushed Eel water over the ridge into the upper Russian River.

Removal is not a fringe position up north. It emerged from the February 2025 "Two-Basin Solution," a framework that would pull out both dams, hand Eel River water rights to the Round Valley Indian Tribes in Covelo, and build a new facility to keep moving water to the Russian River when flows run high. The Sonoma County Water Agency (external source, opens in a new tab), which serves roughly 600,000 people across Sonoma and Marin, was at the table. For the Round Valley Tribes, whose members were cut off from the salmon, lamprey and freshwater clams the river once provided when settlers dammed it, restoration is a matter of cultural repair, not recreation.

Then the fight went national. In April, U.S. Agriculture Secretary Brooke Rollins publicly floated (external source, opens in a new tab) the Elsinore Valley Municipal Water District — a Riverside County agency serving about 160,000 people some 500 miles south — as a would-be buyer, and by June convened a White House meeting with the district and PG&E. Rep. Jared Huffman, who helped broker the Two-Basin talks, said he would investigate (external source, opens in a new tab) what he called a Trump-administration "water grab."

The district's play stalled. On July 27, the Federal Energy Regulatory Commission denied Elsinore Valley's request to intervene in the decommissioning case, first reported by the Lost Coast Outpost (external source, opens in a new tab). FERC Secretary Debbie-Anne A. Reese wrote that the district — which filed its motion more than seven months past the deadline — "failed to demonstrate that good cause exists," as the Press Democrat detailed (external source, opens in a new tab). The district has 30 days to seek a rehearing; a spokesperson, Sylvia Ornelas, told the paper it was "evaluating its next steps."

For now, the decommissioning grinds forward. FERC's environmental scoping comment period runs through Sept. 18, with public sessions set for Sept. 15 and 16 at Eureka's Wharfinger Building. Alicia Hamann, executive director of Friends of the Eel River, called it "a good thing" that Humboldt County residents would finally get the same chance to weigh in that Russian River communities already had.

Jared Huffman, who helped broker the Two-Basin talks, said he would investigate what he called a Trump-administration "water grab."

Demolition wouldn't start until 2028 at the earliest, and PG&E's own timeline stretches into the 2030s — a long runway in which a deal forged among old adversaries could still come undone. For North Bay water users, the open question isn't whether the dams matter to Southern California. It's whether the compromise their own agencies signed survives the next federal budget cycle.