Rebuttal to Californian Staff Writer Stories LEAPS

ELSINORE MAGAZINE 1

March 25,2007

The Californian staff writer Jose Carvajal Tends to Split hairs when writing stories concerning the LEAPS Project. His stroies about the LEAPS Project shows bias views in EM1's OPINION.

His last story last modified March 24, 2007, the title given this story " State Water Code allows water district to pursue power lines" is mis leading that he he states, State Water Code Section 71663.5 would be allowed to provide, generate, construct and deliver electric power, operating, maintaining any and all works, facilities, improvements and property ... necessary or convientfor that generation and delivery"

First of all he relied on the interpertation of the publics relations staff member Greg Morrison, of EVMWD, rather than get the opinion of EVMWD's legal Attorney's John Brown of Best,Best and Kreiger a Riverside California law firm. The story was negligent in showing any attempt in getting the opinion of the EVMWD's attorney.

Secondly the stature Section71663.5 appears to have been taking out of context. The statue in EM1's opinion appears in a nut shell to be relating to giving a water district the rights to construct, provide, generate, operate, maintainin its own facility to provide electric power for its customers. The difference is that EVMWD will not be constructing, generating and delivering electric power, independently for the purpose of providing a service to its own customers first. EVMWD, is particpating in a project by Nevada Hydro a private Corporation for the purpose of generating electric power outside of EVMWD's Jurisdiction. Nevada Hydro is using the public agency EVMWD as an instrument to push the LEAPS, through. Why wasn't that point made in the news article? Furthermore, why did Jim Fargo an administrator decline to comment on the LEAPS Project? No reason was offered. Why the newspapers are shying away from asking hard questions of the public agencies? The public is being kept in the dark for the most part about business that are a public nature.

Mr. Carvajal noted among the dozen letters the Federal Energy Regulatory Commission has received in response to an evironmental impact report released in Feburary. He omitted to talk about the hundreds who showed up in oppositon of the FERC's on LEAPS April 5, 2006 at the Culture Center The story is just not being told appropriately in fairness to the public.

In another story Thursday" Water officials have to talk a fine line"

staff writer Carvajal writes " There is absolutely no reason for any board member here to feel that they can't express thier opinion or vote how they want" board member Phil Williams said. He left it at that knowing full well that is not the truth. Jose had records on how Director Chris Hyland was mistreated and vulurally disrespected for expressing her views by the majority board especially on LEAPS. And yet he let them all get away with a comment as such. That statement by Phil W illiams is a flat lie and many of the public knows it.

Again, Board Member Ben Wicke " It's healthy to have disagreement because it leads to healthy discussion. Another flat lie!!! Nothing can be further from the truth, but Jose let them all get away with the lies, including the spend Greg Morrisson give to him. This is ludicris and shamful.

CAISO'S EVOLVING POSITION ON LEAPS by Doug. Pinnow Ph.D.

ELSINORE MAGAZINE 1

March 12, 2007

Mr. Doug Pinnow Ph. D. reviewed a 7 page, second report on, The CALIFORNIA INDEPENDENT SYSTEM OPERATOR ( CAISO). "CAISO'S EVOLVING POSITION ON LEAPS." His comments below as follows:

I've reviewed the current document and thought you may be interested in my initial reaction.

Its apparent that the FERC is pushing CAISO to figure out a way to help Nevada Hydro "succeed" in the LEAPS Project. By "succeed" I mean that the FERC wants to get Nevada Hydro paid off for getting the LEAPS Project built while also getting Nevada Hydro off the hook for actually having to operate LEAPS POWER plant (and, likely,being financially ruined because the plant is not economically viable).

The FERC is pushing CAISO for their recommendations on how to "succeed" in a time frame that does not allow CAISO to conduct an independent financial analysis of the LEAPS Project. At best, CAISO can only respond to the FERC with their recommendations on how best to integrate LEAPS into the California grid. As such, this action assures that the LEAPS Project will inch forward without anyone blowing the whistle that this project is an economic disaster.

CAISO has concluded that after the February 6th meeting held with their stakeholders (like SDG&E and SCE), that the only viable option is to get Nevada Hydro off the hook for operating LEAPS would be to haver CAISO auction off the rights to operate LEAPS to their stakeholders and any other qualified organizations. Who ever "wins" the operating rights would have all the economic benefits and liabilities that LEAPS has to offer.

CAISO has shrewdly recognized that there should be limited operating term associated with the auction so that the winning bidder would not be blessed by windfall profits or cursed with huge losses for longer than 2 to 3 years.

CAISO has also shrewdly recommended that construction on LEAPS should not begin until after the initial auction had determined that some organization would be willing to accept the operational responsibilities for the first 3 years.

While all this sounds kind of reasonable, it, nevertheless, opens the door to possible serious abuses. By not addressing the economics of LEAPS head on, there is a possibility that some marginal entity (possibly set up by Nevada Hydro) could win the LEAPS operational contract for the first 3 years. This would allow the LEAPS plant construction to proceed. It would also assure that Nevada Hydro would receive the Federally guaranteed$85 million in payments over the first 3 years of operation that are part of their rate request with FERC. The bad news is that even if the marginal entity that won the operation contract were to go bankrupt in, say, six months, Nevada Hydro would still get their $85 million- and we, the ratepayers would be stuck with paying the bill and suffering the consequences of a shutdown hydroelectric power plant (that is not economically viable) and a power lines through the Cleveland National Forest that will continue to operate (because they are economically viable)

I continue to believe that a good way to deal with all of FERC's "dancing around" the obvious economic problems with LEAPS in order to help Nevada Hydro succeed would be to see if we could get the City of Lake Elsinore to require that Nevada Hydro post a construction bond equal to 5% of the LEAPS total construction cost to be uesd in the event that the hydro plant is shut down ( for any reason) within the first 5 years of operation. This bond would be for approximately $70 million and it would be used to restore the Lake and surrounding area disturbed by LEAPS to a condition acceptable to the City and Elsinore Valley community. It would also take away most ,if not all of Nevada Hydro's Profit potential.

Elsinore magazine adds, that perhaps the Army Corps of Engineers, Fish and Game, Fish and wildlife. should be brought in on the construction bond matter, since they have some jurisdiction about the Waters of The United States, Lake Elsinore.

Elsinore Magazine adds also the City Treasurer Peter Weber has raised the construction bond ISSUE at the City, the ratepayers needs to back him, by, going to the city council meetings and be heard . Mr. Pinnow has so gratefully spent time to review the reports for the ratepayers benefit, the least the ratrpayers can do is stand up for themselves in the interest of their own pocket book protection. It is so disgracefully pothetic that the LOCAL NEWSPAPERS are not willing to ask the hard questions and expose projects like the LEAPS RIP OFF KICK BACK SCAMING THE PUBLIC FOR NON OTHER THAN THEIVERY PROFITS. Back in the day news reporters would help the public from being defrauded. Seems those days are gone. Appears more like NEWS reporter, I join the crooks in defrauding the public. The last story on LEAPS ABOUT A WEEK AGO by The Californian NEWS was very very embarrasing!!! a new one was definitely pulled out of the hat. Why don't you get some guts, get of your lazy and print real stories. The public deserves more than junk!!!