FERC issues notices for America's Water Infrastructure Act of 2018 implementation

Federal hydropower regulators have issued a pair of notices framing the implementation of recently enacted legislation designed to streamline the processes for licensing some hydroelectric projects.

On October 23, 2018, President Trump signed the America's Water Infrastructure Act of 2018. The new law amends several portions of the Federal Power Act which govern how the Federal Energy Regulatory Commission issues preliminary permits, hydropower licenses, and approvals for qualifying conduit hydropower facilities. It also directs the Commission to:

• Issue a rule within 180 days establishing an expedited process for issuing and amending licenses for qualifying facilities at existing nonpowered dams that will seek to ensure a final decision by the Commission on an application for a license no later than two years after receipt of a completed application;
• Issue a rule within 180 days establishing an expedited process for issuing and amending licenses for closed-loop pumped storage projects that will seek to ensure a final decision by the Commission on an application for a license no later than two years after receipt of a completed application;
• Along with the Secretaries of the Army, Interior, and Agriculture, jointly develop a list of existing nonpowered federal dams that the Commission and the Secretaries agree have the greatest potential for non-federal hydropower development, to be published within 12 months; and
• Hold a workshop within 6 months to explore potential opportunities for development of closed-loop pumped storage projects at abandoned mine sites, and issue guidance within one year to assist applicants for licenses or preliminary permits for closed-loop pumped storage projects at abandoned mine sites.

On November 13, 2018, the Commission established three dockets in order to implement the requirements of the Act: RM19-6-000 (Licensing Regulations under America’s Water Infrastructure Act of 2018); AD19-7-000 (Nonpowered Dams List); and AD19-8-000 (Closed-loop Pumped Storage Projects at Abandoned Mines Guidance). The Commission's notice establishes a schedule with abbreviated deadlines for the development of these materials, with notices of proposed rulemaking for the expedited licensing processes expected in January or February 2019.

As part of the provisions calling for new expedited processes for issuing and amending licenses for qualifying facilities at existing nonpowered dams and closed-loop pumped storage projects, the new law also requires the Commission to convene an interagency task force, including appropriate federal and state agencies and Indian tribes, to coordinate the regulatory processes required to construct and operate these projects. Also on November 13, the Commission published a notice inviting these groups to request participation in the interagency task force. Federal and state agencies and Indian tribes who wish to participate on the interagency task force must file a statement of interest with the Commission by November 29, 2018.

Kauai small conduit hydro exemption terminated

U.S. hydropower regulators have terminated an exemption from licensing for a small conduit hydroelectric facility proposed for development in Hawaii.

The case concerns the 5.3-megawatt Puu Lua Hydropower Project No. 14069.  Proposed  by Konohiki Hydro Power, LLC, the project would have been located on the Kōkeʻe Ditch Irrigation System on state-owned land on the island of Kauai.  As authorized by the Federal Energy Regulatory Commission in its 2012 order granting the Puu Lua project an exemption from the licensing requirements of Part I of the Federal Power Act, the project would have included two developments with powerhouses.

In granting the Puu Lua project's exemption, the Commission included provisions allowing it to terminate the exemption if certain conditions are not satisfied.  Article 8 of the exemption states the Commission may terminate the exemption if actual construction of any project works has not begun within two years or has not been completed within four years from the issuance date of the exemption.  In 2014, the exemptee successfully won a two-year extension to commence project construction, until April 12, 2016.  But according to the Commission's August 31, 2016 Order Terminating Exemption (Conduit), the developer failed to commence construction of the Puu Lua Hydropower Project prior to the deadline.

In addition to the construction deadlines, the exemption also included an article providing that the Commission may terminate the exemption "if, at any time, the exemptee does not hold sufficient property rights in the land or project works necessary to develop, maintain, and operate the project." This too proved problematic, as in November 2015 the State of Hawaii notified the Commission that the exemptee’s rights to use the property were cancelled effective January 1, 2015.  After the exemptee did not respond to a Commission request for documentation of its rights, Commission staff issued a notice of probable termination of the exemption for failure to commence project construction by the April 12, 2016 deadline, and for failure to possess sufficient property rights.

Ultimately, on August 31, 2016, the Commission issued its order terminating the project's exemption, "for failure to commence construction and maintain sufficient property rights."

Alta, snowmaking pipes and conduit hydro power

Federal energy regulators have issued Alta Ski Area a written determination that its proposed micro-hydropower project will not be required to be licensed under the Federal Power Act.  If developed, Alta's project would be one of the first to generate electricity from a snowmaking water supply pipeline.

Most grid-connected hydropower projects in the U.S. fall under the Federal Power Act, and generally require a license or exemption from the Federal Energy Regulatory Commission.  The process of securing an original license or exemption for a new project can take years and have high costs.  But under a 2013 law, some so-called "conduit" hydro projects -- using pipelines and other existing manmade water conveyances -- can be developed and operated without a license or exemption.  The Hydropower Regulatory Efficiency Act of 2013 defined criteria for the Commission to declare a project to be a "qualifying conduit hydropower facility," and provided that such facilities are not required to be licensed or exempted from licensing under the Federal Power Act.  Key factors include the use of a non-federally owned, manmade water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption and not primarily for the generation of electricity.  If the Commission determines that a project qualifies, it can be built and maintained without a FERC license or exemption.

Under the Commission's process for evaluating conduit hydro projects, the developer must file a notice of intent to construct a qualifying conduit hydropower facility.  If the developer's filing demonstrates that the project meets the statutory criteria, the Commission will issue a notice of its preliminary decision that the project qualifies.  Following a 45-day period within which others may contest the determination, assuming no adverse facts are uncovered, the Commission issues a letter constituting its written determination that the proposed project meets the qualifying conduit hydropower facility criteria.

Alta's course before the Federal Energy Regulatory Commission followed this trail.  In May 2016, Alta filed its notice of intent to construct the Alta Micro-Hydro Project.  That notice and a supplemental filing described a project to tap the existing underground 6-inch-diameter snowmaking water supply pipeline delivering water from Cecret Lake to the Wildcat Pump House.  Parallel to that pipeline, Alta would add a new powerhouse with a 75-kilowatt turbine/generating unit.  Later that month, Commission staff issued a public notice that preliminarily determined that the project met the statutory criteria.  After the 45-day contest period, during which no interventions or comments were filed, in July the Commission issued Alta a written determination that the Alta Micro-Hydro Project meets the qualifying criteria under section 30(a) of the Federal Power Act, and is not required to be licensed under Part I of that law.

The Commission's letter reminds Alta that qualifying conduit hydropower facilities remain subject to other applicable federal, state, and local laws and regulations.  But the ability to develop a conduit hydropower project without requiring a license from the FERC will ease the project's regulatory path.  So far, most projects that have qualified for the conduit hydropower program have been proposed by water districts.  But as ski areas seek to align their operations with sustainability goals, adding low-impact renewable electricity generation may make sense for some.  If Alta's micro-hydro project is successful, other ski areas with existing snowmaking or other water infrastructure over a sufficient vertical drop may follow suit by developing their own conduit hydropower projects.

Alta Ski Area conduit micro-hydro project

Alta Ski Area has proposed developing a micro-hydropower project along an existing pipeline, and hopes to benefit from a streamlined regulatory process.  Federal regulators have made a preliminary determination that the proposed Alta Micro-Hydro Project, in Alta, Utah, satisfies the requirements to be treated as a "qualifying conduit hydropower facility," which would not require licensing under the Federal Power Act.

Alta's proposed project would include a new powerhouse to be built along the existing underground 6-inch-diameter snowmaking water supply pipeline delivering water from Cecret Lake to the Wildcat Pump House, a new turbine/generating unit with an installed capacity of 75 kilowatts, intake and discharge pipes, and appurtenant facilities.  The unit is estimated to generate between 115 and 225 megawatt-hours annually.  There is no dam associated with the project.  Alta presented its micro-hydro project as part of a 2012 request to update its master plan, which the U.S. Forest Service accepted.

Ski areas with snowmaking capacity typically have existing pipelines and water infrastructure, coupled with significant vertical relief.  This can create opportunities to generate electricity using energy harvested from water flowing downhill through a pipeline, particularly if reducing system pressure (like a pressure relief valve) is otherwise needed. 

A 2013 law was designed to help small conduit-based hydropower projects by eliminating their need for a license or exemption from licensing issued by the Federal Energy Regulatory Commission.  Section 4 of the Hydropower Regulatory Efficiency Act of 2013 amended Section 30 of the Federal Power Act.  Section 30 now provides that a "qualifying conduit hydropower facility" -- one that is determined or deemed to meet defined criteria -- is not required to be licensed or exempted from licensing under the Federal Power Act.  These criteria include:

• The conduit the facility uses a tunnel, canal, pipeline, aqueduct, flume, ditch, or similar manmade water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption and not primarily for the generation of electricity.
• The facility is constructed, operated, or maintained for the generation of electric power and uses for such generation only the hydroelectric potential of a non-federally owned conduit.
• The facility has an installed capacity that does not exceed 5 megawatts. 
• On or before August 9, 2013, the facility is not licensed, or exempted from the licensing requirements of Part I of the FPA.

The Federal Energy Regulatory Commission administers this statute.  To start the regulatory process, on May 16, 2016, Alta filed a notice of intent to construct a qualifying conduit hydropower facility.  Alta supplemented its notice on May 20 to clarify that the project "will only operate when there is excess capacity available in the pipeline and when water is hydrologically available", generally after the winter snowmaking season, during spring runoff.  Alta also restated that the pipeline's main purpose will continue to be snowmaking.

Yesterday the FERC issued its notice of preliminary determination of a qualifying conduit hydropower facility for Alta's project.  That notice examines the project relative to each of the four statutory criteria, and then provides the Commission's preliminary determination:

The proposed addition of the hydroelectric project along the existing water supply pipeline will not alter its primary consumptive purpose. Therefore, based upon the above criteria, Commission staff preliminarily determines that the proposal satisfies the requirements for a qualifying conduit hydropower facility, which is not required to be licensed or exempted from licensing.

The notice also sets a 30-day deadline for filing motions to intervene, and a 45-day deadline for filing comments contesting whether the facility meets the qualifying criteria and providing an evidentiary basis.

Other recently proposed conduit hydro projects have been determined to be qualifying conduit hydropower facilities, including a Colorado project using an existing "ditch drop," a Castle Valley, Utah water treatment project, a California wholesale water agency conduit project, and a New Hampshire water works.

Utah conduit hydropower project qualifies

Federal energy regulators have issued a letter determining that a proposed Utah hydropower project meets criteria for development without needing a hydropower license.  Castle Valley Special Service District's proposed Ferron Water Treatment Plant Project would generate electricity using the pressure of water in an existing conduit entering a drinking water treatment plant.  As a result of a determination by the Federal Energy Regulatory Commission, the project can be developed without a FERC hydropower license.

On January 27, 2016, the Castle Valley Special Service District filed with the Federal Energy Regulatory Commission a notice of intent to construct a 6-kilowatt in-conduit hydroelectric net metered system.  The District is a tax exempt municipal government entity that, among other services, provides drinking water to the residents of Ferron City and Clawson Town.

That notice of intent described plans to harness or recover water pressure lost at the inlet to the District's proposed new Ferron Water Treatment Plant.  Water from the Millsite Reservoir would be transmitted to the treatment plant in a conduit owned by Ferron City and the District.  Excess pressure in the incoming untreated water would flow through a pressure reducing valve and turbine hydropower generator.

Under section 30 of the Federal Power Act (FPA), as amended by section 4 of the Hydropower Regulatory Efficiency Act of 2013 (HREA), a qualifying conduit hydropower facility -- one that is determined or deemed to meet defined criteria -- is not required to be licensed or exempted from licensing under the Federal Power Act.  These criteria include:

• The conduit the facility uses a tunnel, canal, pipeline, aqueduct, flume, ditch, or similar manmade water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption and not primarily for the generation of electricity.
• The facility is constructed, operated, or maintained for the generation of electric power and uses for such generation only the hydroelectric potential of a non-federally owned conduit.
• The facility has an installed capacity that does not exceed 5 megawatts. 
• On or before August 9, 2013, the facility is not licensed, or exempted from the licensing requirements of Part I of the FPA.

On February 2, 2016, the Federal Energy Regulatory Commission issued its notice of a preliminary determination that "the proposal satisfies the requirements for a qualifying conduit hydropower facility, which is not required to be licensed or exempted from licensing."

Following the expiration of comment and intervention deadlines, on March 28 the Commission issued its "written determination that the Ferron Water Treatment Plant Project meets the qualifying criteria under FPA section 30(a), and is not required to be licensed under Part I of the FPA."

As the FERC determination on the Ferron project notes, "Qualifying conduit hydropower facilities remain subject to other applicable federal, state, and local laws and regulations."  But the ability to develop an in-conduit hydropower project without needing a FERC license can give a significant boost to projects with suitable conduit water resources.

Colorado conduit hydropower project

A proposed hydroelectric project in Colorado has received a federal determination that it qualifies as a "qualifying conduit hydroelectric facility" and thus is not required to be licensed under Part I of the Federal Power Act.  The Park Farm Hydro Project illustrates the rapid pace with which the Federal Energy Regulatory Commission can act on conduit hydropower projects under a 2013 amendment to its law.

The Federal Power Act requires most hydropower projects to be licensed by the Federal Energy Regulatory Commission.  But Section 4 of the Hydropower Regulatory Efficiency Act of 2013 amended the Federal Power Act to facilitate "conduit hydropower" projects -- those generating electricity using only the hydroelectric potential of a non-federally owned conduit, such as a tunnel, canal, pipeline, aqueduct, flume, ditch, or similar manmade water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption, and is not primarily for the generation of electricity.  Reforms in 2013 exempted qualifying conduit hydropower facilities from needing a license, and established a fast process for to solicit public comment and confirm whether the new exemption applies.  In the ensuing years, a number of projects have qualified for this treatment.

On January 27, 2016, an applicant filed a notice of intent, pursuant to section 30(a) of the Federal Power Act, as amended by Section 4 of the Hydropower Regulatory Efficiency Act of 2013, to construct a qualifying conduit hydropower facility, the Park Farm Hydro Project, to be located near the Town of Kersey, in Weld County, Colorado.  The notice described a proposal to add ten 1-kilowatt Crossflow turbines alongside an existing "ditch drop" or conduit in the Lower Latham Ditch.

On February 2, 2016, the Commission issued its notice of preliminary determination that the proposal satisfies the requirements for a qualifying conduit hydropower facility, which is not required to be licensed or exempted from licensing.  The notice set a 30-day deadline for filing motions to intervene, and a 45-day deadline for filing comments contesting whether the facility meets the qualifying criteria.  No such comments or motions were received.

On March 22, 2016 -- less than 2 months after the applicant first filed its notice of intent -- the Commission issued a letter constituting its written determination that the Park Farm Hydro Project meets the qualifying criteria under Federal Power Act section 30(a), and is not required to be licensed under Part I of the FPA, although other federal, state, and local laws do apply.

This quick timing on the Park Farm project is consistent with other recent FERC action on proposed conduit hydropower projects.

Mojave Water Agency conduit hydropower project qualifies

A California wholesale water provider has received a written determination from federal regulators that its proposed hydroelectric power project qualifies for easier regulatory treatment under federal law.  The project entails replacing a pressure reducing valve on an existing water supply pipeline with a hydropower turbine and generator, to create renewable electric energy.  Crucially, its qualification as a conduit hydropower project under a 2013 federal law enables its construction without a license under the Federal Power Act.

Under the Federal Power Act, most hydropower projects must be licensed by the Federal Energy Regulatory Commission.  But the Hydropower Regulatory Efficiency Act of 2013 amended the Federal Power Act to ease the regulatory burden on certain projects described as "conduit hydropower" -- those generating electricity using only the hydroelectric potential of a non-federally owned conduit, such as a tunnel, canal, pipeline, aqueduct, flume, ditch, or similar manmade water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption, and is not primarily for the generation of electricity.  The 2013 reform law exempted qualifying conduit hydropower facilities from needing licensure, and created an expedited process for soliciting public comment and determining whether the exemption applies.

This reform has led to a resurgence of interest in developing in-conduit hydroelectric projects.  For projects meeting the qualifying criteria, the FERC can act swiftly in issuing a determination that no licensure is required.  In some cases, this determination can come less than 60 days after an applicant files its notice of intent.

FERC's first conduit hydro docket in fiscal year 2016, CD16-1, illustrates this pace.  In that docket, the Mojave Water Agency was able to secure a written determination that the project it proposed meets the qualifying criteria under section 30(a) of the Federal Power Act, and thus is not required to be licensed under Part I of the FPA.

Among other operations, the Mojave Water Agency stores and distributes water in California's High Desert region.  An existing 48-inch pipeline conveys raw water sourced from the State Water Project to the Mojave River Basin for groundwater recharge.  Currently, pressure is reduced through a sleeve valve before discharging the SWP water to the Mojave River Basin by gravity flow.  But under the proposed Deep Creek Hydroelectric project, a hydroelectric turbine will perform the pressure reducing function while powering a generator capable of producing renewable electric energy.  According to the Mojave Water Agency, the hydroelectric station capacity will be 800 kW, with annual estimated power generation of 5,424 MWh.

On October 13, 2015, the MWA applied to the FERC for a determination that the Deep Creek project is a Qualifying Conduit Hydropower Facility, meeting the requirements of section 30(a) of the Federal Power Act (FPA), as amended by section 4 of the Hydropower Regulatory Efficiency Act of 2013 (HREA).

On October 15, 2015, Commission staff issued a public notice that preliminarily determined that the project met the statutory criteria for a qualifying conduit hydropower facility, and thus was not required to be licensed under Part I of the FPA. The notice established a 45-day period for entities to contest whether the project met the criteria. No comments or interventions were filed in response to the notice.

As a result, on December 3 the FERC issued a letter constituting a written determination that the Deep Creek Hydroelectric Project meets the qualifying criteria under FPA section 30(a), and is not required to be licensed under Part I of the FPA.

Other proposed conduit projects have benefited from this quick timeline and relatively streamlined process.  Qualifying conduit hydropower facilities remain subject to other applicable federal, state, and local laws and regulations.

Section 242 hydroelectric incentive program funding

For the first time, the U.S. Department of Energy has funding for its Section 242 hydroelectric incentive program.  The program, arising from Section 242 of the Energy Policy Act of 2005,  provides incentive payments for adding new turbines or other hydroelectric generating devices to existing sites. The Department is accepting applications for the incentive payments through February 1, 2016.

In 2005, as part of the Energy Policy Act of 2005, Congress created the Section 242 hydroelectric incentive program to support the expansion of hydropower energy development at existing dams and impoundments.  Section 242 establishes an incentive for qualified hydroelectric facilities, defined as "a turbine or other generating device owned or solely operated by a non-Federal entity which generates hydroelectric energy for sale and which is added to an existing dam or conduit."  The incentive is set at up to 1.8 cents per kilowatt-hour of net electric energy generated and sold by a qualified hydroelectric facility, indexed for inflation (about 2.3 cents per kilowatt-hour today) up to a maximum of $750,000 per year, for a specified 10-year period.

To get this money, an owner or operator must apply for the incentive payments.  An application for an incentive payment for electric energy generated and sold in a calendar year must be filed during the applications period defined by the Department of Energy in the Federal Register.  But according to the Energy Department's final guidance for the Section 242 program, "DOE will accept applications and make payments to qualified hydroelectric facilities in years when appropriations are available for this purpose."  Until recently, no such appropriations were available.

In Congressional appropriations for Federal fiscal year 2015, the Department of Energy received funds to support this hydroelectric incentive program for the first time. As shown in the conference report to the law that made appropriations for Fiscal Year 2015, Congress appropriated $3,960,000 for conventional hydropower under section 242 of EPAct 2005.

With funding now available, the Energy Department is only accepting applications from owners and authorized operators of qualified hydroelectric facilities for hydroelectricity generated and sold in calendar year 2014. Applications for this round of Section 242 funding are due by February 1, 2016.

NH conduit hydropower project approved

Federal regulators have determined that a proposed hydropower facility at a New Hampshire wastewater treatment plant can be built without a license, under a recently enacted law.  The Federal Energy Regulatory Commission staff has found that the Ammonoosuc Water Treatment Plant Hydroelectric Project proposed by the City of Berlin Water Works is a qualifying conduit hydropower facility under federal law.  Like other conduit projects, the Ammonoosuc project involves the addition of a turbine into an existing system of pipes and pressure reduction valves, and can create additional renewable energy with few incremental impacts.

Under the Federal Power Act, most hydropower projects in the U.S. require licensure by the Federal Energy Regulatory Commission.  But last year, Congress passed the Hydropower Regulatory Efficiency Act of 2013, easing the regulatory burden on projects.  That law exempts certain so-called "conduit" hydropower facilities from the licensing requirements of the Federal Power Act.  Conduit facilities generate electricity using only the hydroelectric potential of a non-federally owned conduit, such as a tunnel, canal, pipeline, aqueduct, flume, ditch, or similar manmade water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption, and is not primarily for the generation of electricity.  To qualify, conduit facilities must have an installed generating capacity that does not exceed 10 megawatts (MW), and must not have been licensed or exempted from the licensing requirements of Part I of the Federal Power Act on or before August 9, 2013.  The Federal Energy Regulatory Commission subsequently issued Order No. 800, updating its rules to conform to the newly streamlined process.

While qualifying conduit hydropower facilities are not required to be licensed or exempted by the Commission, developers of qualifying facilities must file a Notice of Intent to Construct a Qualifying Conduit Hydropower Facility with the Commission.  On August 28, 2014, the City of Berlin, New Hampshire's Water Works filed such a Notice of Intent.  The proposed Ammonoosuc Water Treatment Plant Hydroelectric Project would have an installed capacity of 21 kilowatts (kW) and would be located on the existing 16-inch-diameter raw water transmission main immediately upstream from the pressure-reducing valve for the City of Berlin's water treatment plant.  The project would have an estimated annual generating capacity of 85 megawatt-hours.

The newly streamlined process can work quickly.  On September 10, Federal Energy Regulatory Commission staff issued a preliminary determination that the proposal satisfies the requirements for a qualifying conduit hydropower facility, which is not required to be licensed or exempted from licensing.  The Commission then posted this preliminary determination for public comment for 45 days.

No public comments were received, so on October 31, Commission staff issued its written determination that the Ammonoosuc Water Treatment Plant Hydroelectric Project meets the qualifying criteria under section 30(a) of the Federal Power Act, and is not required to be licensed under Part I of the Federal Power Act.

With this finding in hand just 64 days after filing its application, the city water department can continue securing the remaining approvals necessary to develop the Ammonoosuc Water Treatment Plant Hydroelectric Project.  Securing a FERC hydropower license can be a major endeavor, so the streamlined regulatory treatment now available to qualifying conduit hydropower facilities can be a major advantage.  How many other water treatment plants and other conduit owners will follow the Berlin Water Works' path and develop their own hydroelectricity assets using this easier regulatory process?

FERC Order 800 eases hydropower regulations

The Federal Energy Regulatory Commission has issued an order streamlining its regulations for some small hydropower projects.  FERC Order No. 800 conforms the Commission's regulations to the Hydropower Regulatory Efficiency Act of 2013.  Between Order 800 and the Hydropower Efficiency Act, regulatory processes for developing some small hydropower projects have recently become easier.

Hydropower is one of the nation's most abundant sources of renewable energy -- and yet about 97 percent of the estimated 80,000 dams in the United States do not generate electricity.  While not all are great candidates for hydropower, some non-power dam sites offer significant opportunities to generate renewable electricity with minimal incremental environmental impact.

Congress had these dams in mind when it enacted the Hydropower Efficiency Act on August 9, 2013.  To encourage the use of these dams for electric generation, the Act aims to reduce the costs and regulatory burden on project developers during the project study and licensing stages.  In particular, the Act amended previous statutory provisions covering both preliminary permits and projects that are exempt from licensing.  These statutory changes prompted FERC to update its regulations to conform to the Hydropower Efficiency Act.

Order No. 800 formalizes the Commission's compliance procedures in its revised regulations on preliminary permits, small conduit hydroelectric facilities, and small hydroelectric power projects, and in a new subpart on qualifying conduit hydropower facilities.  Key changes include:

• New regulations recognize the Commission's new statutory authority to extend a preliminary permit once for not more than two additional years, allowing permittees up to 5 total years to complete their feasibility studies without facing possible competition for the site from others.
• Exempt small conduit hydroelectric facilities may now be located on federal lands, and all exempt small conduit hydroelectric facilities may now have an installed capacity of up to 40 megawatts.  Previously, non-municipal small conduit exemptions were limited to 15 megawatts.
• Exempt small hydroelectric power project facilities may now have an installed capacity of up to 10 megawatts.
• Qualifying conduit hydropower facilities, which do not require licensure under the Federal Power Act but do require the filing with FERC of a notice of intent to construct, are now covered under the regulations.

While several of these categories of facility appear similar, each is defined separately by statute.

• A small conduit hydroelectric facility, as defined in section 30 of the Federal Power Act, is an existing or proposed hydroelectric facility that utilizes for electric power generation the hydroelectric potential of a conduit, or any tunnel, canal, pipeline, aqueduct, flume, ditch, or similar manmade water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption and not primarily for the generation of electricity.
• A small hydroelectric power project, as defined in the Public Utilities Regulatory Policies Act of 1978 (PURPA), is a project that utilizes for electric generation the water potential of either an existing non-federal dam or a natural water feature (e.g., natural lake, water fall, gradient of a stream, etc.) without the need for a dam or man-made impoundment.
• A qualifying conduit hydropower facility, as defined in the Hydropower Efficiency Act, is a facility that meets the following qualifying criteria: (1) the facility would be constructed, operated, or maintained for the generation of electric power using only the hydroelectric potential of a non-federally owned conduit, without the need for a dam or impoundment; (2) the facility would have a total installed capacity that does not exceed 5 MW; and (3) the facility is not licensed under, or exempted from, the license requirements in Part I of the FPA on or before the date of enactment of the Hydropower Efficiency Act (i.e., August 9, 2013).

In Order 800, the Commission is merely formalizing several practices it has already adopted since the enactment of the Hydropower Efficiency Act.  For example, the Commission has issued two-year extensions to preliminary permit holders, granted a small conduit exemption on federal lands, and issued conduit facility determinations on whether proposed projects are qualifying conduit hydropower facilities.  Nevertheless, the Act and Order No. 800 work together to offer an easier regulatory path for developers of small hydropower projects without new dams.

Small hydro helped by Hydropower Regulatory Efficiency Act of 2013

Hydropower in the United States may soon expand thanks to recently enacted federal legislation.  The Hydropower Regulatory Efficiency Act of 2013, signed into law on August 9, 2013, is designed to promote hydropower by streamlining the Federal Energy Regulatory Commission's process for developing and operating hydroelectric projects.

The Hydropower Regulatory Efficiency Act of 2013 is predicated on the value of hydropower in providing renewable electricity - and on hydropower's estimated growth potential.  Congressional findings in the Act include that "hydropower is the largest source of clean, renewable electricity in the United States", producing about 7 percent of the nation's power and about 100,000 megawatts of capacity, and employing approximately 300,000 workers across the country.  Yet only 3 percent of the 80,000 dams in the United States generate electricity, highlighting substantial potential for adding hydropower generation to nonpowered dams.  According to one study, by utilizing currently untapped resources, the United States could add approximately 60,000 megawatts of new hydropower capacity by 2025.

To promote the use of these "currently untapped" resources, the Act enhances and streamlines the regulatory framework for some hydropower projects.  For example, the Act exempts certain so-called "conduit" hydropower facilities from the licensing requirements of the Federal Power Act.  Conduit facilities generate electric power using only the hydroelectric potential of a non-federally owned conduit, such as a tunnel, canal, pipeline, aqueduct, flume, ditch, or similar manmade water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption, and is not primarily for the generation of electricity.  To qualify, conduit facilities must have an installed generating capacity that does not exceed 5 megawatts (MW), and must not have been licensed or exempted from the licensing requirements of Part I of the Federal Power Act on or before August 9, 2013.  While qualifying conduit hydropower facilities are not required to be licensed or exempted by the Commission, developers of qualifying facilities must file a Notice of Intent to Construct a Qualifying Conduit Hydropower Facility with the Commission.

The Act also streamlines other regulatory procedures.  For example, it amends Section 405 of the Public Utility Regulatory Policies Act of 1978 to define "small hydroelectric power projects" as having an installed capacity that does not exceed 10,000 kilowatts.  The Act also authorizes the Federal Energy Regulatory Commission to extend the term of preliminary permits for hydropower development for up to 2 additional years beyond the 3 years previously allowed under Section 5 of the Federal Power Act.  It also directs the Commission to investigate the feasibility of a 2-year licensing process for hydropower development at non-powered dams and closed-loop pump storage projects.

The Commission is moving forward with the implementation of the Act.  The conduit, 10-megawatt exemption, and preliminary permit processes are already underway.  On October 2, 2013, the Commission will hold a workshop to launch its investigation of the feasibility of a two-year process for issuing a license for hydropower development at non-powered dams and closed-loop pumped storage projects.

Will the Act lead to the development of more hydropower in the U.S.?  While the Act eases regulatory burdens on project developers and operators, the rate of project development is also driven by market forces.  The intersection of regulations and these market forces will determine the addition of new hydropower capacity.  Nevertheless, the reductions in regulatory burden and uncertainty appear poised to support the buildout of hydroelectric generation from previously untapped resources.

Hydropower Regulatory Efficiency Act of 2012

Last week the U.S. House of Representatives unanimously passed H.R. 5892, the Hydropower Regulatory Efficiency Act of 2012. The bill, introduced by Rep. Cathy McMorris Rodgers of Washington, is designed to implement a variety of measures promoting the production of electricity from small and conduit hydropower projects.

The bill opens with a series of Congressional findings regarding hydropower in the U.S.:

Congress finds that--

(1) the hydropower industry currently employs approximately 300,000 workers across the United States;

(2) hydropower is the largest source of clean, renewable electricity in the United States;

(3) as of the date of enactment of this Act, hydropower resources, including pumped storage facilities, provide--
(A) nearly 7 percent of the electricity generated in the United States; and
(B) approximately 100,000 megawatts of electric capacity in the United States;

(4) only 3 percent of the 80,000 dams in the United States generate electricity, so there is substantial potential for adding hydropower generation to nonpowered dams; and

(5) according to one study, by utilizing currently untapped resources, the United States could add approximately 60,000 megawatts of new hydropower capacity by 2025, which could create 700,000 new jobs over the next 13 years.

The bill goes on to implement a series of regulatory changes, including:

• Increasing the maximum size of hydro projects eligible for exemption from licensing from 5 MW to 10 MW 
• Promoting conduit hydropower – projects involving adding generation to existing pipes and canals
• Allowing FERC to extend a 3-year preliminary permit by up to 2 more years if the permittee worked diligently and in good faith
• Requiring FERC to investigate the development of a 2-year licensure process for developing hydropower at currently-unpowered dams and closed-loop pumped storage projects, and if feasible test the shortened process on one or more pilot projects
• Requiring the U.S. Department of Energy to study the potential of pumped storage to back up intermittent renewables and provide reliability, and to produce new hydropower from existing conduits

H.R. 5892 is now before the Senate for its consideration.

Wyoming-Colorado water pipeline, hydropower

Federal regulators have upheld their rejection of a proposal to pipe water over 500 miles from southwestern Wyoming’s Green River and Flaming Gorge Reservoir to Colorado. The project, known formally as the Regional Watershed Supply Project but more commonly called the Flaming Gorge Pipeline, has been sent back to the drawing board.  The recent permit denial appears to rest largely on the vague and incomplete nature of the application, but it also points to possible gaps in how the federal government regulates water use and hydropower.

Water - a scarce but valuable resource in the American west.

 
The Regional Watershed Supply Project was originally proposed by private developer Million Conservation Resource Group to make new water supply available for use by municipalities, agriculture, and industries in southeastern Wyoming and the Front Range of Colorado. In 2008, the developer applied to the U.S. Army Corps of Engineers for a permit under Section 404 of the Clean Water Act. Under its Section 404 authority, the Army Corps regulates activities involving the discharge of dredged or fill material into waters of the U.S.

In July 2011, based on the record in the case, the Army Corps withdrew the pipeline application, saying in a public notice that the “primary purpose of the project may now change to electrical power generation”, an activity appropriately under the purview of the Federal Energy Regulatory Commission.

Wyco Power and Water Inc., the successor in interest to Million Conservation Resource Group, then applied to the Federal Energy Regulatory Commission for a preliminary permit for its project. By this time, the project concept included seven hydropower projects along the pipeline, including two pumped storage projects and five turbines within the pipeline. In response to the public notice of the permit application, over 200 comments expressly opposing the proposed project were submitted by the Governor of Wyoming, state agencies, counties, municipalities, water conservation districts, utilities, environmental or resource advocacy groups, and individuals.

In February, FERC dismissed Wyco’s request for a preliminary permit (3-page PDF) as premature, noting that the pipeline did not yet exist, nor did the applicant have authorizations for any specific route, nor had a route been substantially identified. FERC also noted that its only role associated with the proposed water supply pipeline would be to authorize the construction and operation of any proposed hydropower projects along the pipeline, not to authorize the siting of the pipeline itself.

Although Wyco asked FERC for a rehearing of its dismissal, yesterday the Commission upheld its earlier decision. In FERC’s order denying request for rehearing and clarification (9-page PDF), FERC reiterated that while it “regularly licenses discrete hydropower developments within substantial water conveyance systems, it has long been the Commission’s practice not to license the entire water conveyance system itself.”

So where does that leave Wyco? With both the Army Corps and FERC finding that the permits sought are premature, a logical next step would be to pin down a specific route and to seek authorizations from the federal, state, and private landowners whose property would be crossed. The developer has suggested that financing the project will be difficult without first obtaining some governmental approvals, and it may be hard to reach deals with landowners without having sufficient financial commitments. Nevertheless, FERC’s decision instructs Wyco that it may come back with a preliminary permit for the hydropower components of its pipeline project once the pipeline is more well-defined.

spring-fed small hydro in Idaho?

Small-scale hydroelectric projects are receiving renewed interest as society looks for cost-effective ways to produce electricity using local, renewable resources.  Depending on available sites and on what alterntative resources might be available, microhydro or small-scale hydroelectric projects can fit the bill.  Even if you own a first-class site for a microhydro project, before you can build or operate your project, you need to understand what federal and state regulations may apply.  Some small hydro projects are treated much like full-scale dam-based hydropower projects, while others (like small projects using existing conduits, pipes or canals) can get an easier regulatory path to approval.

A small hydro project proposed near Grace, Idaho illustrates some of these regulatory considerations, and the importance of understanding how regulators apply the rules.  Grace is a town of about 1,000 people located in Idaho's Gem Valley.  The Bear River runs through the valley on its course flowing out of Bear Lake, around the Bear River Range by Soda Springs, and then south through Grace into Utah's Cache Valley.  In the early twentieth century, recognizing the area's water resources and topographic variation, a series of dams, diversion pipes and powerhouses were built along the Bear River to produce hydroelectricity.  One side effect was that a stretch of river known as Black Canyon was largely dewatered, as an aqueduct carried the water around the canyon to a downstream powerhouse.  Ultimately, Utah Power and Light (and then PacifiCorp) came to operate these assets, and chose to remove one of the dams, an aqueduct and one powerhouse in 2006 and 2007, and to provide some increased flows through the Black Canyon section.

There may be ways to generate hydroelectricity in Grace without diverting water away from the Bear River. Last month, a local farmer with interests in canals and hydro development proposed a new hydro project near Grace.  The Gilbert Hydropower Project proposed to capture the flows of several natural springs and pipe this water about 700 feet to a turbine/generator unit.  Currently, the water is partially used for pasture irrigation with the unused portion flowing into the Bear River; the developer proposes to install a 24‐inch diameter above-ground pipeline to send the water to a Pelton turbine attached to a 75 kW generator.

In its application to the Federal Energy Regulatory Commission (docketed by FERC as Project No. 14367-000), the project developer requested an exemption from the licensing requirements of the Federal Power Act under the so-called "5 megawatt exemption" rule.  That rule allows the Commission to exempt small hydroelectric projects with an installed capacity of 5 megawatts or less that: (1) are located at the site of any dam in existence on or before July 22, 2005, and that use the water power potential of such dam for the generation of electricity; or (2) use a “natural water feature” to generate electricity, without the need for any dam or impoundment.

FERC dismissed the Gilbert project's request for an exemption, noting, "Because [the] project would utilize the flows of a natural spring that travel through 700 feet of pipe to reach the proposed turbine/generator unit, it would neither be at the site of an existing dam nor use the flows from a natural water feature", and thus was ineligible for an exemption.  However, FERC did invite the Gilbert developers to convert their exemption application to a license application, which the developers did earlier this month.  The developers now have until June 18, 2012, to submit the additional information needed for a complete license application.

What's in the future for Grace, Idaho?  What role could using nontraditional water resources such as springs play there or elsewhere in our energy future?

New hydropower from old canals

Innovative approaches could enable a significant increase in the production of hydroelectricity from water flowing through existing canals, conduits and major pipes owned by the U.S. federal government.  According to a recent report prepared by the federal Bureau of Reclamation, the 2012 Site Inventory and Hydropower Energy Assessment of Reclamation Owned Conduits, manmade water control structures managed by the Bureau of Reclamation have the potential to produce an additional 1.565 million MWh of electricity annually.

The U.S. Bureau of Reclamation is a federal water management agency within the Department of the Interior, already experienced at both water management and hydroelectric generation. The Bureau has built over 600 dams and reservoirs in 17 Western states, and is the largest wholesaler of water in the country as well as the second largest producer of hydroelectric power in the western United States. The Bureau's 58 powerplants produce over 40 billion kilowatt hours annually, generating nearly a billion dollars in revenue for the federal government.

Last year the Bureau of Reclamation performed a reconnaissance level assessment of the hydropower potential at 530 sites throughout Reclamation including dams, diversion dams, and some canals and tunnels. In its 2011 report, the Bureau found that 191 sites out of the 530 had some level of hydropower potential, with 70 of those sites (representing a total of 225 MW of generation capacity, or 1.2 million MWh annually) also showing some economic potential for hydropower development.

This year's report found 373 existing Bureau of Reclamation canals and conduits could be used to produce hydropower; together, they could generate an additional 365,219 megawatt-hours of hydropower annually.  Because these canals and conduits are both manmade and already existing, the development of hydroelectric generation facilities using their water may have relatively fewer adverse environmental impacts compared to building a new, traditional dam.  Congress is considering legislation to further enable the development of hydropower from these nontraditional resources, including H.R. 2842, the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act of 2011.

"Small hydro" bill before Congress

Today the full U.S. House of Representatives considers a bill to create jobs and expand production of clean and renewable energy by eliminating red tape on hydropower projects in some small canals and pipelines.  Sponsored by Rep. Scott Tipton of Colorado, H.R. 2842 is better known as the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act of 2011.

The U.S. Bureau of Reclamation is a federal water management agency within the Department of the Interior.  The Bureau has built over 600 dams and reservoirs in 17 Western states, and is the largest wholesaler of water in the country as well as the second largest producer of hydroelectric power in the western United States. The Bureau's 58 powerplants produce over 40 billion kilowatt hours annually, generating nearly a billion dollars in revenue for the federal government.

Beyond these traditional hydroelectric plants, the Bureau of Reclamation's infrastructure systems include canals and pipes holding water capable of producing hydroelectricity but which are not currently doing so.  H.R. 2842 would streamline the regulatory process and reduce administrative costs for small hydropower development at existing Bureau of Reclamation canals and pipes.  It would allow the Bureau to contract with water utilities or other small hydro developers to install up to 1.5 MW of electric generation equipment into an existing canal or conduit without triggering environmental review requirements under the National Environmental Policy Act (NEPA).  It would also direct the Bureau to offer preference to water user organizations for the development of such projects under a federal lease of power privilege.

Some environmentalists have criticized the bill for relaxing environmental protections, although the House Natural Resources Committee found that the environmental impact of adding hydropower to these assets would be minimal to none because they existing man-made facilities  on disturbed ground.  If the bill passes, the Congressional Budget Office estimates that it could generate $5 million in additional federal revenues through increased hydropower production over the next decade.

Additionally, the bill could be seen as empowering small hydro projects, although its current scope is limited to projects using existing Bureau of Reclamation canals and conduits.  Nevertheless, if the bill is enacted following today's House action, it could represent a tip toward renewed small hydro development in the U.S.

Small hydro approved under fast process

This month, federal energy regulators approved a small hydroelectric project within two months of its formal proposal under an innovative streamlined regulatory path.

Recognizing the potential of small hydro projects, the Federal Energy Regulatory Commission (FERC) is interested in simplifying the regulatory process for small projects.  Last year, FERC signed a Memorandum of Understanding with the state of Colorado to streamline the procedures for developing small-scale hydropower projects in that state.  Colorado has identified hundreds of small (5 MW or smaller) or conduit hydropower projects (turbines in water pipes and irrigation canals) whose total capacity could exceed 1,400 MW.  Under the Memorandum of Understanding, Colorado is developing a pilot program to test ways to simplify the processes through which project developers obtain exemptions for small projects.  For example, the application is presented to multiple agencies for simultaneous comment, rather than a prolonged multi-agency back and forth process.

Last week, FERC approved Colorado's first hydroelectric project under the Memorandum of Understanding.  Docketed as Project P-14230, the Meeker Wenschhof hydroelectric project will be developed on an existing ranch irrigation pipeline in northwestern Colorado.  Historically, water flowing through the pipe has been slowed by a valve before being stored in an underground cistern.  As approved by FERC, the rancher will install a 23-kilowatt turbine in place of the valve.  The project is expected to generate 100,000 kilowatt-hours per year on average.

The Meeker Wenschhof project's engineering details are interesting, making innovative and efficient use of the power of flowing water.  Equally interesting is the speed with which the project flew through the regulatory approval process, with the application granted just two months after it was filed with FERC.  Admittedly, this expedited process is currently limited to small hydro and conduit projects.  Nevertheless, the Meeker Wenschhof project's rapid approval illustrates how quickly the regulatory process can be completed if it is designed to accommodate developers' needs.

September 9, 2010 - Lightship Nantucket; FERC signs Colorado MOU on small hydro

The Lightship Nantucket WLV61, in port on Martha's Vineyard in summer 2010.  Until 1983, lightships such as this were used to mark shoals; they have since been functionally replaced (if not aesthetically so) by automated buoys.

The Federal Energy Regulatory Commission (FERC) is working with states to promote the development (or redevelopment) of small hydropower projects across the country.  FERC has recently signed Memoranda of Understanding (MOUs) with four states on the development of hydrokinetic projects: California, Washington, Maine, and Oregon.  Now FERC has signed an MOU with Colorado to streamline the procedures for developing small-scale hydropower projects in Colorado.  According to a recent federal survey, Colorado could be host to several hundred potential small (5 MW or smaller) hydropower projects.  Altogether, these small projects could add up to a combined capacity of more than 1,400 MW.

The MOU focuses on the development by Colorado of a pilot program to test procedural options for simplifying the processes for developers to obtain conduit exemptions and small (5MW or less) project exemptions.

The MOU opens the door for developers of small projects in Colorado to participate in the pilot program.  Colorado and FERC are both expected to take input from project developers about the kind of obstacles they face in permitting and exempting small projects - and about what can be done to help more projects be developed.

As we've seen in Maine, developing or redeveloping small hydro projects can run into siting and permitting challenges at the federal, state, and local levels.  For example, the Scribner's Mill dam reconstruction and repowering project on the Crooked River in Maine faces opposition on water quality, environmental and fisheries concerns.  While an MOU like that between FERC and Colorado might not eliminate these challenges, stakeholders are hopeful that a resolution will be reached that allows environmentally responsible projects to move forward.