Hydro relicensing and intervention timing

The Federal Energy Regulatory Commission issues hydropower licenses for terms of up to 50 years.  At least 5 years before license expiration, the licensee is required to notify the Commission and the public whether it intends to apply for a new license for the project, and what licensing process it requests.  Any license application might not come for years after the filing of that notice of intent.  But as a recent Commission order shows, the opportunity for a third party to intervene in the relicensing case is triggered not by the notice of intent, but only after an application for a new license is actually filed and notice is published.

That recent order involved New York State Electric & Gas Corporation (NYSEG), the licensee for the Upper Mechanicville Hydroelectric Project, FERC No. 2934.  The Upper Mechanicville project is located on the Hudson River in upstate New York, and has an authorized capacity of 18.5 megawatts.  Its original license, issued in 1981 for a 40-year term, expires on March 31, 2021.

On March 30, 2016, NYSEG filed a Notice of Intent to relicense the project, under the Commission's Integrated Licensing Process or ILP, along with a Pre-Application Document.

On April 13, 2016, the New York State Council of Trout Unlimited filed a motion to intervene in the docket, citing Rule 214 of the Commission's Rules of Practice and Procedure.  But on May 24, the Commission issued a notice dismissing that motion.

The notice first points to Rule 214(a)(3) of its procedural order, any person may seek to intervene and become a party in a proceeding by filing a motion to intervene that complies with the content requirements of Rule 214(b).  But the notice states that because NYSEG has not yet filed an application for a new license, there is no proceeding in which to intervene.  It therefore dismissed the motion to intervene as premature.

The notice does offer the Trout Unlimited group two other approaches to involvement.  First, it suggests that interested persons can register and eSubscribe to the docket.  Second, it notes that should NYSEG file an application for a new license for its project, notice of the application will be published, and interested entities "will have an opportunity to intervene and present views concerning the project as proposed in the license application."

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.

FERC hydro dam relicensing, timing and options

Under U.S. law, the Federal Energy Regulatory Commission has jurisdiction over most hydropower dams and projects.  The Federal Power Act directs the Commission to issue licenses for hydropower projects for a defined term of years, and provides the basis for the FERC hydro relicensing process.  The relicensing process can take years, and often must be started before a licensee has made final long-term plans for the project's fate.  For example, what if a FERC licensee is considering surrendering the license and removing the dam, at the same time that its existing license approaches expiration and a relicensing application is due?

A recent order by FERC staff under its delegated authority in City of River Falls, Wisconsin, P-10489-014, illustrates this dynamic.  The City of River Falls, Wisconsin, holds the license for the River Falls Project on the Kinnickinnic River, in Pierce County, Wisconsin.  When the license for the River Falls Project was issued, the Commission determined that a 30-year term was appropriate and in the public interest.  That current license expires on August 31, 2018.

Because the FERC hydropower relicensing process can take years -- or longer -- licensees who wish to retain licensure are required to start the planning, stakeholder, and application filing processes early.  In the River Falls case, a relicense application will be due by August 31, 2016.  To get the ball rolling, in 2013 the City filed a Notice of Intent (NOI) to relicense the project and Pre-Application Document (PAD) and elected the Commission’s Traditional Licensing Process (TLP).

Meanwhile, the City of River Falls is trying to evaluate the project's future.  The City is considering surrendering the license instead of continuing with relicensing, and to draft and adopt a Kinnickinnic River Corridor Planning Strategy to "reflect a single community vision for the river, with or without the hydroelectric project."

But the studies and deliberation required to evaluate dam relicensing, surrender, or alternatives take time.  Meanwhile, the clock ticks toward license expiration.  The City tried to buy 5 more years, by asking FERC to extend the termination date of its existing license, so that it expires on August 31, 2023.  As described by FERC:

The City states the additional time is needed so that it does not spend time and money relicensing the project only to determine through its Corridor Plan that the license should be surrendered and the project decommissioned. The City believes that a lengthy and expensive licensing process is the wrong process for making such a determination. The City explains that a decision about the future of the project would be made by the fall of 2017, and a notice of intent to relicense the project or a surrender application would be filed no later than August 31, 2018.

The City's request was supported by public commenters, mostly on the theory that an extension would allow time to explore license surrender and dam removal.

But as expressed in the order, the Commission saw "no reason why the City cannot evaluate both license surrender and relicensing in the remaining time it has to file a relicense application (due August 31, 2016). In fact, analysis of studies and feedback from agencies would help inform its decision of whether or not to continue to pursue the project."  In particular, the Commission did not view the simultaneous City's Corridor Plan process as "unique circumstances or circumstances beyond the City’s control that prevent it from making a determination by August 31, 2016... as to whether to relicense or to surrender the project."

The Commission also distinguished the River Falls case from precedent where it has extended other license terms, either to enable a licensee to amortize the cost of substantial improvements to project facilities or substantial new environmental measures, or to coordinate the license expiration date with the expiration dates of other licenses in the same river basin.

Ultimately, the Commission denied the City of River Falls, Wisconsin’s application to extend the license term for the River Falls Project from August 31, 2018, to August 31, 2023.  As noted in the Commission's order, the "City remains able to work on both a relicensing option and a surrender option while it develops its Corridor Plan should the City wish to do so."

The City has filed its Notice of Intent and Pre-Application Document, and has received Commission approval to use the Traditional Licensing Process.  Any relicense application will be due 2 years before the current license expires, or on August 31, 2016.  In the meantime, the City will presumably continue to explore its options, including license surrender and dam removal, or relicensing the project.

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.

Alaska proposes large new dam

The Alaska Energy Authority has filed key documents with federal regulators giving formal notice of its intent to build the proposed 600 megawatt Susitna-Watana Hydroelectric Project.  If this project is approved and built, it will be the largest hydroelectric project developed in the U.S. since 1966.

Plans to develop a large-scale hydropower project on the Susitna river have been considered for decades.  In 2010, the Alaska Legislature established a goal of providing half of the state’s electric power from renewable sources by 2025.  The Alaska Energy Authority, a public corporation of the state whose mission is to use Alaska's natural resources to produce electricity and lower costs, concluded that Alaska could not meet the 50% renewable goal without building a major new hydroelectric project.

On December 29, 2011, the Alaska Energy Authority filed a notification of intent to file an application for a hydroelectric license and a pre-application document with the Federal Energy Regulatory Commission.  FERC docketed the project as No. 14241.  (You can read these documents in FERC's eLibrary here.)

In those documents, the Alaska Energy Authority described the project as located about 180 miles north of Anchorage.  The dam itself would be large: 700 to 800 feet in height, and with a crest length of over 2,700 feet.  The dam would impound a 39-mile-long reservoir, flooding 20,000 acres and capable of storing about 2,400,000 acre-feet.  The Authority plans to install three 200 MW turbine-generator sets for a total installed capacity of 600 MW, but is considering up to 800 MW of capacity.

The Authority expects the FERC hydropower licensing process to take up to 6 years.  The size and impacts of the project make it attractive to some yet controversial to others.  Public comments are already being filed in the FERC docket.