Wisconsin municipal hydro project license extended

Friday, March 25, 2016

Federal energy regulators have granted a Wisconsin city's request to extend its hydropower project license for five years to allow time for comprehensive river corridor planning.  The March 17 order was the result of a rehearing following a denial by agency staff.  It relies on a finding of "relatively unique facts," which include a stakeholder process that will inform the licensee's upcoming decision whether to continue an effort to seek a new license for the project, or to surrender the license.

At issue is the Federal Energy Regulatory Commission license held by the City of River Falls, Wisconsin, for the 375-kilowatt River Falls Project on the Kinnickinnic River.  The municipal hydro project's current 30-year license expires on August 31, 2018, and a relicensing process is already underway -- but the city is also considering alternatives including surrendering the license.  As a result, last year the City filed a request to extend the expiration date of its license by five years, until August 31, 2023.  The City asked for more time to work with stakeholders and the community to complete a comprehensive river corridor plan, and determine whether to relicense the project or surrender the license.

But on December 9, 2015, Commission staff issued an order denying the City’s request. The order noted that the Commission has granted extensions of license terms only in a few specific instances and under limited circumstances.  For example, the Commission has extended license terms to amortize the cost of substantial new improvements or substantial new environmental measures, to coordinate the expiration dates of licenses in the same river basin, or because of unique circumstances or circumstances beyond a licensee’s control -- factors it did not originally find applicable to this proceeding. 

The City filed a timely request for rehearing of this denial, which the Commission recently granted.  In its March 17, 2016 order extending the license term five years, the Commission noted that it "generally does not favor actions that delay the completion of licensing proceedings," and historically "has extended license terms only in very narrow circumstances."  But "given the relatively unique facts of this case", the Commission found that an extension of the license term was in the public interest.

The Commission cited a list of specific factors making this proceeding unique:
We find that the unique circumstances of this proceeding – the combination of unanimous stakeholder support for the extension, the tying of the extension to the development of a comprehensive river plan, and the fact that the licensee is a small municipality – demonstrate that a five year extension of the project license is in the public interest. All resource agencies and stakeholders support the City’s proposal to extend the license term in order to complete the corridor plan and decide whether to seek a subsequent license or surrender the project. This strong support and lack of any adverse comments demonstrates that the City is not requesting an extension of the license term merely to delay the preparation of a relicense application and to continue generating under more favorable terms.
It also noted an efficiency benefit from extending the license term, given the pending question: whether to relicense the project, or surrender the license:
Last, allowing the City time to determine if it should relicense or surrender prior to having to file a relicensing application is the most efficient use of resources. As a small municipality, the City may incur significant costs in preparing and processing a relicensing application despite the fact that it may later surrender its license.
The Commission's order extended the license term for the River Falls Hydroelectric Project to August 31, 2023.  Meanwhile, the comprehensive Kinnickinnic River corridor planning process will continue.  That process may inform the City's decision whether to relicense the River Falls project, surrender its license, or pursue some other alternative.

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