The Truckee Meadows Water Authority (TMWA) board decided Wednesday not to pursue immediate reconstruction of the Farad dam and hydro facilities that were damaged in a flood two decades ago.
Board members instead are asking for public input on what should happen to the inoperative facility in Nevada County, Calif. it’s about to acquire as a result of litigation. Some had questions and floated ideas that included use for educational opportunities, open space, and residential living.
“Something not good could turn into something great,” Reno City Councilwoman Neoma Jardon said.
Janet Philips, Tahoe-Pyramid Bikeway president, told the board that access to the area should remain regardless of what TMWA decides to do with the property.
“My hope is that we can get a permanent easement for the trail before it’s sold to someone else,” Philips said.
TMWA staff said there wouldn’t be a sufficient return on investment for the utility to pursue reconstruction of the Farad dam and that other options for the facility should be explored. Potential problems include current availability and pricing of hydroelectric resources and anticipated uninsured costs of reconstruction.
“It’s in a bad state of disrepair,” said Pat Nielson, TMWA director of distribution maintenance and generation.
Nielson said contractors interested in salvage material have contacted him.
Farad Hydroelectric Plant, built alongside the Truckee River in 1899, was the first electric generating plant on the eastern slope of the Sierra Nevada. Mining interests bankrolled the project so water could be pumped out of the Virginia City silver mines as the mine shafts were sunk deeper into the earth.
BACKGROUND
- TMWA purchased the hydroelectric facility and some of its assets, according to an agreement in January 2001 between TMWA and Sierra Pacific Power Co., known today as NV Energy. As a result of damages from a 1997 flood, the Farad facility wasn’t operational then and Sierra Pacific was involved in litigation with insurance companies over coverage disputes. Because of this, the purchase agreement provided for a post-closing delivery of the facility.
- Insurance litigation delayed delivery of the Farad facility but TMWA and Sierra Pacific entered into a settlement agreement in June 2014. The agreement stated Sierra Pacific would assign TMWA 100 percent of all future insurance proceeds related to Farad and all claims for interest due for delayed payment. This includes payments under actual cash value coverage, replacement coverage, and destruction and increased cost of construction policies. The exact amount of insurance proceeds remain subject to litigation between Sierra Pacific and insurance underwriters.
- In January 2017, the Second Judicial Court entered an order affirming $12.2 million of actual cash value plus interest and said Sierra Pacific is entitled to replacement cost coverage for reconstruction of the Farad facility. Therefore, Sierra Pacific can seek reimbursement for invoiced construction costs in excess of actual cash value coverage up to policy sub-limits of $62 million.
- The court order also says that Sierra Pacific and TMWA may only recover replacement costs from insurers if electing for replacement coverage by April 2017. If so, reconstruction of the dam must take place within three years of the conclusion of the litigation. Assuming no further post-judgement proceedings on the interest payment occur, the deadline will expire Jan. 18, 2020. Since the deadline applies only to replacement coverage, nothing prevents TMWA from reconstructing the Farad facility at a later date.
- Sierra Pacific timely elected replacement coverage pursuant to the settlement agreement, which requires it to transfer the Farad facility to TMWA within 120 days after the insurer’s acceptance, granted July 17, 2017.
CONTACT TMWA: http://tmwa.com/contact/
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