More hydropower relicensure expected

Many U.S. hydropower projects face relicensure by the Federal Energy Regulatory Commission within the next 3 years, making hydro project relicensing a hot topic.

The FERC is the nation's primary federal regulator of hydropower facilities.  Under Part I of the Federal Power Act, the Commission's responsibilities over hydropower include issuing licenses for the construction of new projects, relicensing for the continuance of existing projects, and oversight of all ongoing project operations, including dam safety inspections and environmental monitoring.

According to the Commission, about 1,023 issued licenses were active as of April 1, 2015.  Licenses are typically effective for up to 50 years, largely because dams and hydroelectric power facilities are typically long-lived assets and because the regulatory process for licensure is extensive (and expensive for project developers or owners).  Nevertheless, as time marches on, even a 50-year license will ultimately expire, so owners of FERC-licensed hydropower projects must eventually evaluate relicensure. 

Federal law and regulations, including Section 15(b)(1) of the Federal Power Act and 18 C.F.R. §5.5 of the Commission’s regulations, govern the relicensure process.  Between 5 and 5.5 years before an existing license expires, the licensee must notify the Commission whether or not it intends to file an application for a new license.  This filing is known as a Notice of Intent or NOI.  At the same time, the licensee seeking relicensure must also file a Pre-Application Document (PAD).  The PAD must include: (1) a process plan and schedule; (2) a description of the project’s location, facilities, and operation; (3) a description of the existing environment at the project and its resource impacts; (4) a preliminary list of issues and proposed studies; and (5) a list of contacts.  A licensee must also distribute the PAD to appropriate federal, state, and interstate resource agencies, Indian tribes, local governments, and members of the public likely to be interested in the project’s relicensing.

The Commission has noted an anticipated uptick in the rate of relicensure applications.  From October 1, 2010 through September 30, 2014, the Commission has received an annual average of about 12 Notices of Intent to relicense hydroelectric projects.  According to the FERC, 47 licensed projects were in the relicensure process as of April 1.  But even more projects face relicensure in the next 3 years.  According to an April 1 notice issued by the Commission, about 100 FERC-licensed hydropower projects will begin the relicensing process between October 1, 2016, and September 30, 2018.  The Commission thus anticipates the annual average number of Notices of Intent to increase to about 34.

Owners of FERC-licensed hydropower projects nearing the end of their license terms must plan ahead to prepare for relicensure.  Given the expected increase in hydroelectric project relicensure, Commission staff reasonably expects an increase in their workload.  While most existing projects have historically been able to win new licenses, in some cases hydropower project relicensing can become controversial.  Expect the next several years to bring increased relicensing activity.