Federally owned dams and other structures can create opportunities for private development of hydropower facilities, in exchange for a fee. While fees charged to hydropower developers for using federally owned dams will likely remain stable in the near term, a look at the history of government dam use charges illustrates the process and dynamics involved in setting these fees.
Under federal law, many aspects of hydropower projects are regulated
by the Federal Energy Regulatory Commission. Section 10(e)(1) of the
Federal Power Act (FPA) authorizes the Commission to collect annual
charges from hydropower licensees whose projects make use of government
dams or other structures owned by the United States.
Before 1984, the Commission assessed charges
for the use of government
dams and other United States structures on a case- by-case basis.
Typically, the Commission charged licensees half of the project's shared
net benefit. That net benefit was defined
as the difference between the value of the power (taken as the least
expensive alternative power) and the cost of project power (computed
from the costs of building and operating the project).
1984, the Commission issued Order No. 379, replacing its government dam
use charges with graduated flat rates. In that order, the Commission
concluded that this method "best
balances the statutory goals of providing a reasonable return to the
Federal government, encouraging hydropower development, especially small
projects, and minimizing costs to consumers."
enacted the Electric
(ECPA) in 1986,
of the FPA
dam use charges. ECPA adopted the method and rate levels of the
Commission's new graduated flat rate structure as both the maximum
allowable and the only federal dam use charges assessed by any U.S.
agency. The Commission currently levies these maximum values, as it has
since adopting them in 1984.
Section 10(e)(4) of the
FPA requires the Commission to report to Congress every five years on
whether the government dam use charges are appropriate. The Commission's fifth and most recent report, dated October 17, 2013, concluded
government. The report noted that in
but that there
had been no
noted that it had issued
With a no-action recommendation by the Commission, Congress may choose not to amend Section 10(e) of the Federal Power Act in the near term. However, the ECPA requires a periodic reassessment of the level of government dam use charges; the next mandatory report will come in 2018. Moreover, Congress is interested in promoting new hydropower development, as is evidenced by its enactment of the Hydropower Regulatory Efficiency Act of 2013; Congress could, on its own, modify government dam use charges. Nevertheless, for the near term, U.S. government dam use charges assessed under the Federal Power Act will likely remain stable.