Ms. Magalie R. Salas, Secretary

Page 1May 13, 2005

May 29th, 2005

Office of the Secretary

Federal Energy Regulatory Commission

825 North Capitol Street, N.E.

Washington, D. C. 20426

RE: Permit P-12491 – Pit River Dam Retrofit Project

Dear FERC:

The following is: Progress Report # 1 Preliminary Permit- FERC 12491.

Progress Report 1:

This Report covers the six-month period ending 5/01/05, and encompasses the First Stage Consultation meeting that occurred on November 4th, 2004. Minutes from that meeting were distributed to all participants in early December and only typographical corrections received. Corrected versions were distributed to all parties with a special effort made to get it to the Pit River Tribe. The tape and copy of those notes were forwarded to the FERC. Different, but similar, project layouts were presented to the First Stage Consultation group for discussion and comment and posted on the Davis Hydro WEB site davishydro.com. These were derived from previous informal on-site conversations with the Forest Service. As all present were very familiar with the site, no site visit was requested.

Temperature Effects:

The Forest Service requests a study or information on the temperature effects to instream flow releases specific to the Davis Hydro Project for the following reasons:

Compliance with Conservation strategies objectives
A number of wildlife species classified as Forest Service Sensitive – primarily, hardhead and sculpin fish.

Entrainment:

California Fish and Game has concerns about entrainment of Trout, Rough Sculpin, Cottus asperrimus, Hardhead, Mylopharodon conocephalu. Davis Hydro will address entrainment in design and supply a comprehensive background study on entrainment effects on fish populations. CFG has asked for a comprehensive study of the issue. The Forest Service repeated this focus, but asks the question a little differently specifically. The Forest Service asked for more details on any fish screens or structures that would reduce mortality caused by the project. In Part two of their filing (requested studies) they did not ask for additional studies on this issue, their focus was on temperature issues.

Soil Stability:

The Forest Service has repeated remarked on the soil instability in the area, and requested careful addressing of this issue in any design.

Numerous additional concerns were raised that will have to addressed in the draft design and construction. These include architectural, historical, wildlife, and habitat, issues at all phases of the project. The concerns of the Forest Service are all considered by the applicant as not only reasonable, but important.

Only one issue stands out in advance as requiring early examination and study as it may be a go-nogo issue. All other issues, in the opinion of the applicant, can be dealt with positively and fairly easily by documentation and exposition. The key agreement that must be dealt with separately has to do with potential fish screen requirements.

Design Study focus on River Release

The River Release will have to be released through a screen or grizzly that is currently too small to reliably pass the flows expected under the new FERC 233 License. PG&E has had trouble in the past maintaining flow through this orifice or during drawdown using the lower level gates when they are cleaning the trash rack, for example in October 2003.

The current release mechanism has been determined to be adequate for the current releases, but may prove inadequate for the expanded release regime of the new license without modification. Since it is prone to occasional debris clogging at current flows, Davis Hydro believes a modification may be in order to meet new requirements. For this reason we are looking at suggesting to PG&E putting in an expanded or second conduit through the dam with a more easily cleaned trash rack out front. We will work with PG&E to solve this problem as it related directly to possible use of the conduit for hydropower.

General Discussion of Progress:

The following progress has been made during the first period of this project. Documentation for all aspects including current discussion design can be found on the Davis Hydro WEB site at:

(Most plans should be printed at 11x17”)

Specific Article 8 Items:

I certify that copies of this letter will be mailed prior to Friday June 1st 2005 to Mr. Jim Canaday of the State Water Resources Control Board, 1001 I Street, P.O. Box 2000, Sacramento, CA 95812-2000.

Numerous informal meetings have taken place with all interested parties. The first stage consultation meeting has been completed.

Anticipated Date of Submitting License: 6/30/06.

Ongoing Studies

This site is somewhat unique, in that is has just had an extensive environmental study done for FERC Project 233 relicensing with a myriad of ancillary ongoing studies and monitoring activities. As this is written the work for the FERC License has been completed and the 401 application has been made by PF&E. These studies and ongoing concerns were discussed at great length with Ms. Valenzuela of the Forest Service and notes from that discussion were addressed in attachments to the First Stage Consultation meeting.

Actual Studies Requested:

The following specific work items were derived from the Stage 1 Consultation meeting. We that took place April 18th 2004:

California Fish and Game requested in their 11/12/04 letter:

Design Review of synchronous bypass and bypass design.
Fish Screen design details
Construction details – primarily to maintain acceptable water quality and quantity.

Forest Service Design Review of: (see part I of their plenar letter dated 12/23/04).

Visual / Architectural/ Scenery impacts prior to submission to SHPO.
Bald Eagle , Northern Spotted Owl and other wildlife impacts especially the effects of temperature changes on and the entrainment of fish
Recreation interaction/ noise/ signs/ access/ interference, etc.
Soil stability impacts
Temperature impacts on Fish. (see Part II of their plenar letter).

2. Summary of Agency Consulting:

Formal Stage 1 consultation meeting has taken place November 4th 2004. Minutes were circulated and copies of corrected minutes with tape forwarded to the FERC. Informal meetings with some interested parties have taken place both before and since that date. To a certain extent, we are waiting for the license to be issued so as to know what parameters we are dealing with.

3. Investigations in the next 6 months:

Preliminary engineering will be started with PG&E looking at River Release flow mechanisms. Continuing investigations on fish screening will be made.
We are a bit held up waiting for the PG&E license.

4. Summary of consultations:

Extensive:

Informal review with PG&E has been made of exporting the power from this area. A preliminary review has shown that it is feasible.

5. Assessment of feasibility of the project.

This project is becoming more feasible as the price of power increases.

Schedule of Study Tasks: We are somewhat dependent on PG&E’s license to be released so we know what flows to design to. No dates are currently available, however the general approach to bypass flows will be discussed with PG&E engineering staff.

Economic Viability

Ongoing and improving

Project Possibility

A letter has been received from PG&E indicating the conditions under which they will consider development of the site. These are acceptable. Currently, we have enabled the agreement with the requested deposit against engineering expenses.

Environmental/Historical

These studies will commence formally with a FERC Project 233 license issuance and an agreement in principle with PG&E. Our fish screening study is somewhat independent of actual flows and so will commence in parallel with other work.

Summary:

Momentum on this project is picking up dramatically with the increasing price of power and numerous indications by PG&E that they will consider the project constructively.

Respectfully,

Richard D. Ely, Permitee

cc Canaday

Notice to all Parties of availability of this report on WEB.

Davis Electric27264 Meadowbrook Drive, Davis, California 95616(530) 753-8864