Successive preliminary permit for Cave Run hydro project

Federal energy regulators have issued an order issuing a successive preliminary permit to Cave Run Energy, LLC for a proposed hydroelectric project to be located at a dam in Kentucky owned by the U.S. Army Corps of Engineers.

The Federal Power Act provides for federal regulation of most hydropower projects in the U.S. Under Section 4(f) of the Federal Power Act, 16 U.S.C. § 797(f), the Federal Energy Regulatory Commission is authorized to issue preliminary permits for the purpose of enabling prospective applicants for a hydropower license to secure data and prepare material supporting a license application as required by section 9 of the Federal Power Act.  As the Commission has said, "The purpose of a preliminary permit is to preserve the right of the permit holder to have the first priority in applying for a license for the project that is being studied."

In the Cave Run case, on March 23, 2012, Cave Run Energy, LLC filed an application to the Commission for a preliminary permit to study the Cave Run Dam Hydroelectric Project.  The project would be located at the U.S. Army Corps of Engineers’ Cave Run Dam on the Licking River in Rowan and Bath Counties, Kentucky.  As described in that application, it would include a bifurcation structure to be constructed at the end of the dam’s outlet conduit, a powerhouse containing two turbine/generating units with a total capacity of 6.0 megawatts, a penstock and a 12.7-kilovolt transmission line.  The proposed project would use surplus water released from the Cave Run dam by the Corps.

The Commission granted Cave Run Energy a preliminary permit by order dated July 13, 2012.  That order provided that the preliminary permit was effective "for a period effective the first day of the month in which this permit is issued, and ending either 36 months from the effective date or on the date that a development application submitted by the permittee has been accepted for filing, whichever occurs first."   In the ensuing months, the applicant conducted studies and outreach, and filed a pre-application document and notice of intent to file a license application for the project.

On August 13, 2015, Cave Run Energy filed an application for a successive preliminary permit for the project.  While many aspects of the project described in the 2015 application were similar to those described in 2012, the generators' total capacity was revised to 4.95 megawatts.

After a public notice period, on February 11, 2016, the Commission issued a successive preliminary permit to Cave Run Energy for two more years.  The order granting the successive preliminary permit notes the Commission's policy to "grant successive permits if it concludes that the applicant has diligently pursued the requirements of its prior permits."  The order cites information provided by the applicant demonstrating progress with the analysis of the project’s feasibility, and towards the development of its proposed project, including the filing of a notice of intent and preapplication document.

As in some previous orders, the order granting Cave Run Energy a successive preliminary permit explains the Commission's reasoning in setting a two-year term for the successive permit.  It notes that the Hydropower Regulatory Efficiency Act of 2013 authorizes the Commission to extend preliminary permit terms for not more than two additional years if the Commission finds that the permittee has carried out activities under the permit and with reasonable diligence.  The order observes that this legislation suggests that "five years is a sufficient maximum period to prepare a development application."  Accordingly, it granted Cave Run Energy a successive preliminary permit for a 24-month term.