Hydroelectric

Hydropower licensing reform: What’s all the fuss?

By Linda Church Ciocci, Executive Director, National Hydropower Association

July 1, 2003 — Hydropower is the nation’s leading renewable resource – yes, that’s right, I said renewable resource.

Often thought of as a “mature” technology, and often left out of the debate on spurring renewable energy growth in America, hydropower provides more than 80 percent of the nation’s renewable energy. What’s more, it is the most important resource in ensuring grid reliability and one of the leaders in ensuring national energy security. Yet despite all of its importance, the future of hydropower is threatened by an arcane, costly and dysfunctional licensing process.

Hydropower project owners are facing higher costs and a loss of both operational flexibility and generation capacity as a result of new operating constraints imposed during relicensing that do not effectively balance the energy values of the project with important environmental goals.

A typical hydro project can take 8-10 years to weave its way through the licensing process, incurring millions of dollars in process costs that do nothing to improve project operations, efficiency or the river ecosystem. Rather than spending money on process, hydro licensing should be more focused on results – ensuring that the hydro project remains viable and competitive, all without compromising our environmental standards that protect and ensure riverine health and vitality.

Reforming the licensing process as soon as possible is crucial because more than 50 percent of the nation’s non-federal hydropower capacity – 296 projects representing 30,492 MW – will go through the process in the next 15 years. Many projects will soon begin the relicensing process since project renewals typically begin approximately five years prior to the expiration of an existing license.

Fortunately, after nearly a decade of debate, Congress is close to achieving real reforms. In the 107th Congress, substantive hydro licensing reform legislation was approved by the U.S. Senate with strong bipartisan support. This year, the House passed H.R. 6, which contains a strong hydro licensing title identical to the hydro licensing language in S. 14, the energy bill that was recently approved by the Senate Energy and Natural Resources Committee and is currently being debated on the Senate floor.

How did we get here? Since 1986, the Federal Energy Regulatory Commission (FERC) has been required, under the Federal Power Act, to give “equal consideration” to a variety of factors when issuing hydro project licenses and relicenses. This authority requires FERC to consider the power, economic, and development benefits of a particular project, as well as energy conservation and the protection and enhancement of fish and wildlife.

The courts, however, have interpreted the Federal Power Act so as to prevent any effective balancing from taking place. The courts have given federal natural resource agencies (U.S. Departments of Interior, Commerce and Agriculture) and others the authority to set “mandatory” conditions on FERC licenses – conditions that are automatically made a part of the final license. FERC has no opportunity to question the basis of mandatory conditions set by the agencies. The net result is that no one is balancing. No one has the authority to look at the big picture of how hydro fits into our national energy and public policy.

Critics have said that the balancing issue is nothing more than an attempt by industry to avoid its responsibility for environmental stewarding or to address its impact on the nation’s rivers. This simply is not so. All energy sources, even renewable energy sources, leave a footprint on the environment. The challenge we all face is to lessen that footprint. The hydropower industry spends hundreds of millions of dollar annually to do just that. And we will continue to do so well into the future – with or without legislative reform.

In a 2001 licening report, FERC staff stated its preferred solution to this problem: “The most effective way to reduce the cost and time of obtaining a hydropower license would be for Congress to make legislative changes necessary to restore the Commission’s position as the sole federal decisional authority for licensing conditions and processes.” While this solution is ideal, there is an alternative solution. The hydropower provisions of both H.R. 6 and S. 14 would make some important, environmentally responsible changes to the FERC hydro licensing process:

• Require federal resource agencies with mandatory conditioning authority over non-federal hydropower projects to accept more cost-effective or energy-saving alternatives that are determined – by the Secretaries of the resource agencies – to satisfy environmental protection standards that are equal to the standards used by the agencies when they craft their conditions.

• Require agencies to document that they gave “equal consideration” to the economic, environmental and other important public impacts of their mandatory conditions, to the extent the information is available, before imposing them on licensees and/or rejecting alternative mandatory conditions – something that agencies are not doing now.

• Provide an opportunity, once mandatory conditions are drafted by federal resource agencies, for a timely agency hearing – on the record and open to all parties – on any disputed issues of material fact.

• Provide for a non-binding dispute resolution process if FERC determines a final mandatory condition is inconsistent with requirements of the Federal Power Act or other applicable law.

It is important to note that the proposed language in both House and Senate provisions would not remove any authorities of federal resource agencies to issue conditions on hydropower projects; change the existing environmental threshold required by law for hydropower licensing; exclude or eliminate public participation (including Tribes) in the hydropower licensing process; or undermine or affect states’ rights in the licensing process.

Linda Church Ciocci is Executive Director of the National Hydropower Association ([email protected]).


Hydroelectric

Hydropower Licensing Reform: What’s all the Fuss?

Issue 7 and Volume 107.

By Linda Church Ciocci, Executive Director, National Hydropower Association

Hydropower is the nation’s leading renewable resource – yes, that’s right, I said renewable resource. Often thought of as a “mature” technology, and often left out of the debate on spurring renewable energy growth in America, hydropower provides more than 80 percent of the nation’s renewable energy. What’s more, it is the most important resource in ensuring grid reliability and one of the leaders in ensuring national energy security. Yet despite all of its importance, the future of hydropower is threatened by an arcane, costly and dysfunctional licensing process.

Hydropower project owners are facing higher costs and a loss of both operational flexibility and generation capacity as a result of new operating constraints imposed during relicensing that do not effectively balance the energy values of the project with important environmental goals. A typical hydro project can take 8-10 years to weave its way through the licensing process, incurring millions of dollars in process costs that do nothing to improve project operations, efficiency or the river ecosystem. Rather than spending money on process, hydro licensing should be more focused on results – ensuring that the hydro project remains viable and competitive, all without compromising our environmental standards that protect and ensure riverine health and vitality.

Reforming the licensing process as soon as possible is crucial because more than 50 percent of the nation’s non-federal hydropower capacity – 296 projects representing 30,492 MW – will go through the process in the next 15 years. Many projects will soon begin the relicensing process since project renewals typically begin approximately five years prior to the expiration of an existing license.

Fortunately, after nearly a decade of debate, Congress is close to achieving real reforms. In the 107th Congress, substantive hydro licensing reform legislation was approved by the U.S. Senate with strong bipartisan support. This year, the House passed H.R. 6, which contains a strong hydro licensing title identical to the hydro licensing language in S. 14, the energy bill that was recently approved by the Senate Energy and Natural Resources Committee and is currently being debated on the Senate floor.

How did we get here? Since 1986, the Federal Energy Regulatory Commission (FERC) has been required, under the Federal Power Act, to give “equal consideration” to a variety of factors when issuing hydro project licenses and relicenses. This authority requires FERC to consider the power, economic, and development benefits of a particular project, as well as energy conservation and the protection and enhancement of fish and wildlife.

The courts, however, have interpreted the Federal Power Act so as to prevent any effective balancing from taking place. The courts have given federal natural resource agencies (U.S. Departments of Interior, Commerce and Agriculture) and others the authority to set “mandatory” conditions on FERC licenses – conditions that are automatically made a part of the final license. FERC has no opportunity to question the basis of mandatory conditions set by the agencies. The net result is that no one is balancing. No one has the authority to look at the big picture of how hydro fits into our national energy and public policy.

Critics have said that the balancing issue is nothing more than an attempt by industry to avoid its responsibility for environmental stewarding or to address its impact on the nation’s rivers. This simply is not so. All energy sources, even renewable energy sources, leave a footprint on the environment. The challenge we all face is to lessen that footprint. The hydropower industry spends hundreds of millions of dollar annually to do just that. And we will continue to do so well into the future – with or without legislative reform.

In a 2001 licensing report, FERC staff stated its preferred solution to this problem: “The most effective way to reduce the cost and time of obtaining a hydropower license would be for Congress to make legislative changes necessary to restore the Commission’s position as the sole federal decisional authority for licensing conditions and processes.” While this solution is ideal, there is an alternative solution. The hydropower provisions of both H.R. 6 and S. 14 would make some important, environmentally responsible changes to the FERC hydro licensing process:

  • Require federal resource agencies with mandatory conditioning authority over non-federal hydropower projects to accept more cost-effective or energy-saving alternatives that are determined – by the Secretaries of the resource agencies – to satisfy environmental protection standards that are equal to the standards used by the agencies when they craft their conditions.
  • Require agencies to document that they gave “equal consideration” to the economic, environmental and other important public impacts of their mandatory conditions, to the extent the information is available, before imposing them on licensees and/or rejecting alternative mandatory conditions – something that agencies are not doing now.
  • Provide an opportunity, once mandatory conditions are drafted by federal resource agencies, for a timely agency hearing – on the record and open to all parties – on any disputed issues of material fact.
  • Provide for a non-binding dispute resolution process if FERC determines a final mandatory condition is inconsistent with requirements of the Federal Power Act or other applicable law.

It is important to note that the proposed language in both House and Senate provisions would not remove any authorities of federal resource agencies to issue conditions on hydropower projects; change the existing environmental threshold required by law for hydropower licensing; exclude or eliminate public participation (including Tribes) in the hydropower licensing process; or undermine or affect states’ rights in the licensing process.

Linda Church Ciocci is Executive Director of the National Hydropower Association ([email protected]).