FERC says Nicatous microhydro doesn't need license

Federal energy regulators have ruled that a micro-hydroelectric project proposed by a remote Maine sporting camp does not require licensing under the Federal Power Act. The Nicatous case illustrates one expedited regulatory path for off-grid micro-hydropower projects.

Nicatous Lake Lodge and Cabins, LLC has proposed the Nicatous Lodge Micro Hydroelectric Project. The one-kilowatt project would be located on Nicatous Stream in Maine, and would supply electricity to an off-grid sporting camp currently powered by a diesel generator.

The camp owner filed a Declaration of Intention concerning the proposed project on March 18, 2016. The Commission issued a notice of the Declaration of Intention on May 10, setting a 30-day public comment period.

On June 21, 2016, Commission staff issued an order ruling on the Declaration of Intention and finding that licensing is not required. As articulated by the Commission in that order, pursuant to section 23(b)(1) of the Federal Power Act, a non-federal hydroelectric project must be licensed (unless it has a still-valid pre-1920 federal permit) if it:

(a) is located on a navigable water of the United States;
(b) occupies lands or reservations of the United States;
(c) utilizes surplus water or waterpower from a government dam; or
(d) is located on a stream over which Congress has Commerce clause jurisdiction, is constructed or modified on or after August 26, 1935, and affects the interests of interstate or foreign commerce.

In this case, the order found “insufficient evidence to determine whether Nicatous Stream is navigable,” but determined that the stream is a headwater of the navigable Penobscot River, and thus “the project would be located on a Commerce Clause stream and also would be constructed after August 26, 1935.”

Crucially, the order found that the off-grid nature of the project – its lack of an interconnection to the interstate electric grid – meant that licensing was not required: “The project would not affect interstate commerce because it would not displace grid power nor would it connect to an interstate grid. Therefore, the project does not require licensing under section 23(b)(1) of the FPA.”

While licenses are available for hydropower projects under the Federal Power Act, the regulatory process for licensing is relatively lengthy and may require costly studies. A hydropower project that can be developed without a license thus has some advantages.

The Commission’s order includes a note emphasizing the relevance of a grid connection in licensing determinations for hydropower projects: “If the Nicatous Lodge property is connected to the interstate grid in the future or if other evidence sufficient to require licensing is found, section 23(b)(1) would require licensing. Under section 4(g) of the FPA, the project owner could then be required to apply for a license.” This note is consistent with Commission precedent finding that the existence or absence of a grid tie for a proposed microhydro project can determine whether hydropower licensing is required.