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.

New law eases some hydro licensing processes

A recently-enacted federal law will make it easier for hydroelectric project developers to secure a license for new hydroelectric facilities at existing non-powered dams.

U.S. rivers are home to thousands of dams, most of which impound water but don't generate electricity. A 2013 report suggested only 3% of the nation's 80,000 dams were used to produce hydroelectric power. In an effort to facilitate the development of hydroelectric facilities at some of these non-powered dams, Congress recently enacted the America's Water Infrastructure Act of 2018.

Title III of the Act relates to energy matters. One section of the Act extends the default term of preliminary permits for hydropower development from three to four years. The Act authorizes the Federal Energy Regulatory Commission to extend the period of a preliminary permit for up to four additional years, and to issue an additional permit under "extraordinary circumstances."

Another section of the Act speeds up the process through which the Commission evaluates proposals to develop "qualifying conduit hydropower facilities" and increases such a project's maximum installed capacity from 5 megawatts to 40 megawatts.

A third section of the Act requires the Commission to, within 180 days, issue a rule establishing an expedited process for issuing and amending licenses for hydroelectric facilities meeting defined criteria. These criteria require the "qualifying facilities" to be associated with an existing dam or other barrier operated for the control, release, or distribution of water for agricultural, municipal, navigational, industrial, commercial, environmental, recreational, aesthetic, drinking water, or flood control purposes, which as of the date of the Act's enactment was not generating electricity with Commission-licensed or exempted hydropower generating works. The Act also requires that the operation of these facilities must not result in any material change to the storage, release, or flow operations of the associated qualifying nonpowered dam.

The Act also includes provisions creating an establishing an expedited process for issuing and amending licenses for closed-loop pumped storage projects, and prescribing the considerations for setting the terms of new licenses for existing projects through the relicensing process.

The Act, which was introduced in the Senate as S.3021, was signed by President Trump on October 23, 2018, and became law the same day. The Commission has until April 2019 to issue the rules required by the Act.

Dominion affiliate proposes Tazewell pumped storage project

A Virginia-based utility company has applied to federal regulators for a preliminary permit to study the feasibility of a pumped hydroelectric storage facility in the coalfield region of Southwest Virginia. If built, Dominion Energy Services, Inc.'s Tazewell Hybrid Energy Center Project could use mine water sources for the initial fill and makeup water. 

On September 6, 2017, Dominion Energy Services, Inc. filed an application to the Federal Energy Regulatory Commission for a preliminary permit, pursuant to section 4(f) of the Federal Power Act, proposing to study the feasibility of the Tazewell Hybrid Energy Center Project. As described in Dominion’s application, a September 7 press release, and a September 29 notice by the Commission, the Tazewell project would be a pumped hydroelectric storage facility. According to Dominion, the project would “be operated by Dominion Energy Virginia for hydropower generation during peak energy demand periods and pumping during off-peak energy demand periods.” Dominion points to grid benefits from pumped storage including integration of intermittent power generation sources, enhancement of grid stability and supply of other ancillary benefits. The applicant notes that the site “could support multiple configurations, including different-sized pumped-storage facilities,” a flexibility which Dominion said enables it to determine the best environmental, technical and economic solution.

The project would not use any existing dams or hydroelectric facilities, but would involve new dams and other facilities constructed for the proposed project. In its application, Dominion described two alternative configurations — a smaller Alternative 1 and a larger-capacity Alternative 2 – featuring an upper reservoir and a lower reservoir. Under either alternative, Dominion described potential water sources “for the initial fill and makeup water” as

(1) Mine ID P03_903 and (2) Mine ID P03_017. The initial fill water for the Project's reservoirs will be supplied by one or more of these water sources via a proposed pump and water conveyance system… Although the upper reservoir would be located on Oneida Branch and the lower reservoir would be located in West Fork Cove Creek, it is anticipated that the proposed Project will use mine water sources for the initial fill and makeup water.

Dominion says it will evaluate the feasibility of relying on mine water sources under the preliminary permit.

Dominion’s press release mentioned that it is also conducting in-depth studies of another potential site for a pumped hydroelectric storage facility, the former Bullitt Mine near Appalachia, Virginia. That mine has been closed since 1997 and is currently flooded.

In its application, Dominion cited 2017 Virginia legislation that it said “encourages one or more pumped storage stations and includes a requirement that all or a portion of it be powered by renewable energy produced in the coalfield region.”  That legislation amended existing law to allow a utility to petition the State Corporation Commission for approval of a rate adjustment clause to recover from customers the costs of “one or more pumped hydroelectricity generation and storage facilities that utilize on-site or off-site renewable energy resources as all or a portion of their power source and such facilities and associated resources are located in the coalfield region of the Commonwealth ... regardless of whether such facility is located within or without the utility's service territory.” The coalfield region is defined as including seven counties and one city: Lee, Wise, Scott, Buchanan, Russell, Tazewell and Dickenson Counties and the City of Norton.

Adding micro-hydro to licensed hydropower project

What happens when a FERC hydropower licensee applies for a preliminary permit to study the feasibility of developing a micro-hydro project, where the new project will be sited at an existing project's dam?  In a recent case involving the city of Aspen, Colorado, Commission staff dismissed the preliminary permit application, instead suggesting that the licensee apply to amend its existing license to include the proposed new capacity and facilities.  Because many other existing dams may be candidates for the installation of new hydropower facilities, the Aspen Micro Hydro Project case illustrates important dynamics of hydropower licensing under the Federal Power Act.

The case centers on a March 4, 2015 application by the City of Aspen for a preliminary permit, pursuant to section 4(f) of the Federal Power Act, to study the feasibility of developing the Aspen Micro Hydro Project.  Most grid-connected hydropower in the U.S. is regulated under the Federal Power Act, and requires approvals by the Federal Energy Regulatory Commission.  As described in Commission documents, the proposed Aspen project would include an existing concrete diversion dam and intake structure, plus proposed new equipment including a draft tube, 10- to 20-kilowatt turbine-generator unit, and associated facilities interconnected to an existing utility transmission line.  The application describes project values including energy production, protection of the city's water rights, and instream flow protection for environmental benefit.  As noted in the application, "Renewable projects such as the Aspen Micro Hydro Project will permit the City of Aspen to reduce its reliance on coal-fired energy and comports with the City’s goal of reducing its energy-related greenhouse gas emissions. A local facility also will provide tangible evidence to residents and visitors of Aspen’s commitment to renewable energy."

Crucially, as noted by the Commission, the dam proposed for use in the Aspen micro-hydro project is currently licensed as part of another hydropower project: the City of Aspen's Maroon Creek Project.   Commission staff have noted that "for licensed projects, such as the Maroon Creek Project, section 6 of the [Federal Power Act] prohibits the alteration of licensed project works without the mutual consent of the licensee and the Commission."  On April 16, 2015, Commission staff sent the city a letter explaining that because the proposed micro-hydro project would be sited within the existing project boundary of the city’s Maroon Creek Project, any application for a permit or license within the project boundary would be denied.  For this reason, Commission staff concluded that "a preliminary permit for the Aspen Project would serve no purpose."  Instead, Commission staff informed the city "that it could instead file an application to amend its existing license to add the Aspen Project’s proposed capacity and related facilities to the Maroon Creek Project." 

Over a year later, the city filed a status report describing its intention to "enter into a business relationship with T-Lazy Seven Ranch (T-Lazy), a Colorado ranching company, for joint development of the Aspen Project."  The status report describes plans to form a new limited liability company, and ultimately to amend the permit application to replace the city as applicant with the new company.

In a November 15, 2016 Order Dismissing Preliminary Permit Application, Commission staff noted that the purpose of a preliminary permit is "to encourage hydroelectric development by affording its holder priority of application (i.e., guaranteed first-to-file status) with respect to the filing of development applications for the affected site."  The order also notes that the prohibition in section 6 of the Federal Power Act against the alteration of licensed project works without the mutual consent of the licensee and the Commission applies, no matter whether it is the existing licensee or the new entity who seeks to pursue additional development within the project boundary of the Maroon Creek Project.  The Commission's consent to alter licensed project works would presumably come in the form of an order amending the Maroon Creek Project's license -- a consent not formally requested int the Aspen Project's docket.

Continuing to find that a preliminary permit for the Aspen Project would serve no purpose for these reasons, the order dismissed the city's permit application.  The order leaves the door open for the licensee to seek to amend the Maroon Creek Project's license, potentially in concert with an application to transfer the licensee to a new licensee or co-licensee.

Beyond the City of Aspen's interests in hydropower, the case has regulatory implications for other proposals to develop micro-hydro or new generating capacity at dams or other structures already part of FERC-licensed projects.  A Department of Energy report released earlier this year found significant national potential to increase hydropower capacity, including by adding power at existing dams and canals.  Where the existing assets are part of a FERC-licensed project, developers will be wise to be mindful of how the Commission interprets the Federal Power Act.

Federal dams, nonfederal hydro, and preliminary permits

Can a hydropower developer obtain a preliminary permit from the Federal Energy Regulatory Commission for a project to be located at a federal dam, where the federal entity owning the dam says it opposes the project?  In a series of recent decisions, the Commission has denied preliminary permits in these circumstances, saying there is no purpose in issuing a preliminary permit.

U.S. federal law generally encourages the development of hydropower at existing dams.  Under sections 4(e) and 4(f) of the Federal Power Act, the Commission has general authority to issue preliminary permits and licenses for hydropower projects located at federal dams and facilities.  There are limits on this jurisdiction, such as if federal development of hydropower generation at the site is authorized, or if Congress otherwise unambiguously withdraws the Commission’s jurisdiction over its development.

The Commission also has discretion to deny a preliminary permit application, so long as it articulates a rational basis for its decision.  Through recent precedent, one basis the Commission has developed for denying applications is if the project would rely on modifications to federal facilities, but the federal entity says it would not approve those modifications or opposes the project.

For example, on April 25, 2016, Loxbridge Partners, LLC applied to the Commission for a preliminary permit to study the feasibility of the proposed McNary Second Powerhouse Project No. 14777. The project would be located at the U.S. Army Corps of Engineers’ McNary Lock and Dam facility on the Columbia River in Oregon.  On May 16, 2016, Commission staff asked the Corps for its opinion on whether non-federal development is authorized at McNary Dam, and if so, whether Loxbridge’s proposal would interfere with existing dam operations or improvement plans.  The Corps responded that it believed the Commission does not have jurisdiction to issue a preliminary permit or license for the site, and that the Corps opposed Loxbridge's proposed project on the ground that it would interfere with the Corps’ operation of McNary Dam.  The Corps asked the Commission to reject the permit application.

On September 2, 2016, the Commission denied Loxbridge's preliminary permit application.  It cited recent decisions in which "the Commission has denied preliminary permits for projects at federal facilities after the federal entities indicated that no purpose would be served in issuing a permit because the federal entity would not approve modifications to its federal facilities."  One of these decisions cited, Advanced Hydropower, Inc., 155 FERC ¶ 61,007 (2016), even relates to a different proposal for non-federal hydropower development at the McNary Dam.  The Commission also noted that "because the Corps, which owns the McNary Lock and Dam facility and whose permission would be needed for the development of any project at that facility, has stated that it opposes the project, there is no purpose in issuing a preliminary permit."

The Commission has issued similar denials with respect to Rivertec Partners LLC's proposed Clearwater Hydroelectric Project No. 14753 to be located at the Corps' Dworshak Dam in Idaho, Owyhee Hydro, LLC's proposed Anderson Ranch Pumped Storage Hydroelectric Project No. 14648 to be located at a Bureau of Reclamation dam in Idaho, and Symphony Hydro LLC's proposed Project No. 14627 to be located at the Corps' Upper St. Anthony Falls Lock and Dam on the Mississippi River near Minneapolis.

The policy highlights the importance for project developers of cultivating good relations with federal agencies owning dams and other facilities with hydropower development potential.

Maine tidal project preliminary permit issued

A tidal energy developer has been granted a preliminary permit to study a proposed project in Western Passage, near the city of Eastport, Maine.

Under the Federal Power Act, most grid-connected tidal power projects require licensing by the Federal Energy Regulatory Commission.  Section 4(f) of the Federal Power Act authorizes the Commission  to issue preliminary permits to allow prospective applicants for a hydropower license time to secure the data and perform the acts required to prepare a license application.  A preliminary permit preserves the holder's right to have first priority in applying for a license for the project being studied.

On December 4, 2015, ORPC Maine, LLC applied for a preliminary permit to study the feasibility of the proposed Western Passage Tidal Energy Project No. 14743.  As described in that application, the project would include fifteen of ORPC's proprietary 500-kilowatt hydrokinetic marine turbine-generator units for a combined capacity of 7.5 megawatts, along with anchoring and mooring systems, and transmission lines running ashore to an existing distribution line.  The materials describe an estimated average annual generation of 2.6 to 3.53 gigawatt-hours.

The Commission granted that preliminary permit by an order dated July 13, 2016.  In that order, the Commission addressed comments filed by the Maine Department of Environmental Protection, the U.S. Department of the Interior, the Passamaquoddy Tribe, and an individual.

In its comments, the tribe raised concerns over what the Commission calls "site banking".  As described by the Commission, the essence of its policy against site banking is that "an entity that is unwilling or unable to develop a site should not be permitted to maintain the exclusive right to develop it."  In some cases, the Commission invokes its policy against site banking to deny applications for successive preliminary permits.

The tribe questioned whether ORPC Maine should be granted a new preliminary permit when it has held two prior preliminary permits for the site of the proposed Western Passage Project -- the first issued in 2007, and a successive permit in 2011 -- without ever filing a development application. 

But in ORPC's case, the Commission noted that the project site has been unencumbered by a permit since ORPC's most recent permit expired in 2013, and that no other entity has filed a preliminary permit or development application for the site.  The Commission concluded that "a sufficient amount of time has passed for any other entity interested in developing the Western Passage Project site to have filed a preliminary permit or development application for the site and none has done so. Consequently, issuing a permit at this time to ORPC Maine for this site would not contribute to site banking."

Federal dams and preliminary permits

U.S. federal entities own dams with untapped hydropower potential that could be developed by private parties -- but a recent regulatory decision highlights the difficulty of winning key approvals when the federal dam owner opposes the project.  The Federal Energy Regulatory Commission's April 5, 2016 denial of an application for a preliminary permit for the McNary Lock and Dam Project illustrates this dynamic.

The U.S. Army Corps of Engineers owns and operates a 980-megawatt hydroelectric project at the McNary Lock and Dam on the Columbia River in Oregon and Washington. The project was authorized by the River and Harbor Act of 1945, and all its power units have been in operation since 1957.

But perhaps there may be untapped hydropower potential at the site that could be developed.  In 2015, a company called Advanced Hydropower, Inc. applied to the Federal Energy Regulatory Commission for a preliminary permit, pursuant to section 4(f) of the Federal Power Act, to study the feasibility of the proposed McNary Dam Advanced Hydropower Project No. 14697.  That project would utilize the existing McNary Dam, plus new facilities including a 34-megawatt turbine.

But by an order dated April 5, 2016, the Commission denied Advanced Hydropower's application.  In doing so, the Commission cited judicial precedent that it "is not required to grant a preliminary permit application, so long as it articulates a rational basis for not doing so."  It then cited recent Commission decision denying preliminary permits for projects at federal facilities after receiving comments from the relevant federal entities indicating that no purpose would be served in issuing a permit because the federal entity would not approve modifications to its federal facilities.

Notably, in the McNary Lock and Dam case, the Corps filed timely motions to intervene and comments opposing the project.  In its order denying Advanced Hydropower's application, the Commission noted:

Here, because the Corps, which owns the McNary Lock and Dam facility and whose permission would be needed for the development of any project at that facility, has stated that it opposes the project, we find there is no purpose in issuing a preliminary permit here.

Based on the Corps' opposition to the project, the Commission thus denied Advanced Hydropower's application for a preliminary permit for the McNary Lock and Dam project.

Alaska tidal permit surrendered

Five years after applying for and receiving a preliminary permit to study a proposed Alaska tidal energy project, the project developer has surrendered that permit.

At issue is ORPC Alaska 2, LLC's proposed East Foreland Tidal Energy Project.  The developer first applied to the Federal Energy Regulatory Commission for a preliminary permit under Section 4(f) of the Federal Power Act on August 2, 2010. 

That application described a project site in middle Cook Inlet, a marine waterway of the northern Pacific Ocean. The proposed hydrokinetic project would lie offshore of the East Foreland, near the west coast of the Kenai Peninsula by Nikiski, Alaska.  The application described the site in middle Cook Inlet as offering a maximum tidal range of up to 9.20 meters, with geomorphology favorable to strong currents.  The application described the developer's intent to install a pilot or commercial project in a phased approach.

The FERC issued a first preliminary permit for the East Foreland project by order dated March 11, 2011.  As permitted, the East Foreland project would include a series of 150-kilowatt TideGen and/or 150-kW OCGen turbine-generator modules developed by ORPC, with a combined capacity between 5 megawatts (MW) and 100 MW, with an average annual generation between 13 and 340 gigawatt-hours.

Over the ensuing years, the permittee studied the site and the project and filed periodic reports to the Commission. The preliminary permit required the permittee to file a notice of intent and draft pilot license application within two years of the permit date, but ORPC requested and received a six-month extension. 

On March 3, 2013, the permittee filed a request for a successive preliminary permit for the East Foreland Tidal Energy Project.  The Commission granted a successive preliminary permit on June 16, 2014, describing a project with a combined capacity of no more than 5 megawatts.  Study and reporting activities continued.

But on December 11, 2015, the permittee filed a request for acceptance of its surrender of the East Foreland Tidal Energy Project's preliminary permit.  In that request, the permittee described its "significant progress in evaluating the feasibility of a tidal energy project at East Foreland, Alaska, over the past several years."

Yet the surrender request also described the headwinds that stalled the project:

Nonetheless, the strength of the conventional energy market in Alaska precludes timely integration of new technology, like tidal energy systems, and advancement of the Project at the pace established by the original Schedule of Activities. As a result, public and private funding sources have sought nearer-term market impact from their investments. This in turn has negatively affected ORPC’s ability to expeditiously gather site data during Alaska’s limited field season window and maintain pace with FERC milestones.

As a result, the request describes the permittee's decision to surrender the East Foreland tidal project's preliminary permit and "to continue our focus and dedication of resources towards technology optimization and development of near term market opportunities that are available to ORPC and its power system technology."

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 hydropower and successive preliminary permits

U.S. federal regulators can give a preliminary permit to the developer of a proposed hydropower projects -- but won't give out a successive permit unless the developer demonstrates it acted diligently under its prior permit.

Developers of proposed hydropower projects in the U.S. can apply for a preliminary permit from the Federal Energy Regulatory Commission.  During its term -- up to three years, according to the Federal Power Act -- a preliminary permit for a hydropower project does not authorize construction, but gives the permittee first priority to apply for a license for the project.  This exclusivity allows the permittee to study the site, communicate with stakeholders, and develop the information necessary to support a license application.  It also gives the permittee something of a "reservation" for the site during its term.  In exchange, the permittee must submit periodic reports on the status of its outreach efforts and studies.

Sections 4(f) and 5 of the Federal Power Act authorize the Commission to issue preliminary permits to potential license applicants for a period of up to three years.  While the statute does not specify how many preliminary permits an applicant may receive for the same site, the Commission's policy is to grant a successive preliminary permit only if it concludes that the applicant has pursued the requirements of its prior preliminary permit in good faith and with due diligence.   The Commission has noted that each application for a successive preliminary permit is considered on a case-by-case basis, but has described "a minimum bar that a permittee must achieve to be diligent."

A recent FERC delegated staff order in Coralville Energy, LLC, Project No. 14431-001, illustrates this policy.  On November 2, 2015, Coralville Energy applied to the FERC for a preliminary permit for the Burlington Street Dam Hydroelectric Project, to be located at the existing Burlington Street Dam on the Iowa River, near Iowa City in Johnson County, Iowa. 

But this was not Coralville Energy's first application relating to the Burlington Street; it had received a preliminary permit three years earlier, on October 18, 2012.  According to the 2015 order, the record under that prior permit "shows that Coralville Energy did not pursue the requirements of its prior permit with due diligence for purposes of receiving a successive permit because it fails to demonstrate progress toward preparing a development application."

In particular, the 2015 order notes that semi-annual reporting under the 2012 preliminary permit noted a series of items: late reports filed subsequent to Commission staff’s letters warning Coralville Energy of probable cancellation for failure to file progress reports; reports that were too brief, vague, and "nearly identical"; no change to the study plan from that proposed in 2012, suggesting no progress made toward the preparation of a development application; and no information about conducting, reviewing, or coordinating environmental studies or the status of the permittee’s efforts to obtain permission to access and use land not owned by the permittee.

By contrast, the order describes Commission staff's view that the requisite diligence requires completion of certain steps towards preparing a development application, including "developing study plans, conducting studies in a timely fashion, consulting with  resource agencies, and developing the application in accordance with the Commission’s regulations."  Additionally, Commission staff have said that it "must be able to discern a pattern of progress toward the preparation of a development application from the content of a permittee’s filings."

On this basis, the 2015 order denied Coralville Energy’s application for a successive preliminary permit.  The order illustrates FERC hydropower staff's perspective on the level of diligence expected of the holder of a preliminary permit.  It also highlights the importance of substantive action in pursuit of a license or development application as well as timely and adequate semi-annual reporting by preliminary permittees.

ORPC Maine files Western Passage preliminary permit application

A Maine-based tidal energy company has applied to federal regulators for a preliminary permit for a tidal energy project proposed for development off the coast.  ORPC Maine, LLC, a wholly-owned subsidiary of Ocean Renewable Power Company, LLC, filed its application with the Federal Energy Regulatory Commission on December 4, 2015, seeking a preliminary permit for the Western Passage Tidal Energy Project off the downeast city of Eastport.  The preliminary permit could set ORPC up to develop hydrokinetic energy generation at the site, though process and uncertainty lie ahead before the project could be developed.

ORPC filed its application for preliminary permit for the Western Passage project on December 4, 2015.  The FERC docketed the filing under P-14743.  As described in its application, the project would entail "a next generation TidGen® Power System with a buoyant tension mooring system (BTMS)."  The turbine generator unit, or TGU, would be similar to that installed by ORPC in Cobscook Bay in 2012.  While ORPC noted that it will determine the ultimate project configuration based on activities conducted during the preliminary permit phase, ORPC estimates the project will consist of approximately 15 total TGUs. The nameplate rating of each will be up to 500 kilowatts (kW) with the total project output capped at 5 MW.

ORPC previously held preliminary permits for the Western Passage site (P-12680) which expired on December 31, 2013. ORPC requested a successive preliminary permit on January 1, 2014, but the FERC issued an order denying a third preliminary permit for lack of extraordinary circumstances.

In its recent application, ORPC notes that it has "continued environmental studies and engagement with local stakeholders and regulatory officials regarding the Cobscook Bay Project, and have kept them informed regarding potential future plans for Western Passage," and highlights its other recent successes, including support from the U.S. Department of Energy and local stakeholders.

It is unclear whether the FERC will grant ORPC's application.  Assuming it does, the preliminary permit will give ORPC exclusive rights for 36 months to study the site, and priority to file an application for a project license.  That preliminary permit term should enable ORPC to study any technical and economic challenges relating to the Western Passage project -- after which the developer may be in a better position to evaluate the project's feasibility and support an application for a license.

Oregon wave energy project surrenders license

Ocean waves contain tremendous amounts of energy that could be harnessed by humans -- but difficulties have led a pilot project proposed off the Oregon coast to surrender a key federal license.

Calm waters along the shore of Penobscot Bay, Maine.

Ocean Power Technologies subsidiary Reedsport OPT Wave Park, LLC had proposed a wave energy project in the Pacific Ocean off the central Oregon coast.  In 2012, the Federal Energy Regulatory Commission issued a license for the project.  That license authorized the developer to install a single "PowerBuoy" wave energy converter for testing, followed by additional grid-connected buoys.  The developer also envisioned a third phase that could bring the project's capacity to 50 megawatts, and secured a preliminary permit from the Commission to study the site.

Despite securing these key regulatory approvals, the Reedsport project quickly ran into technical difficulties.  Reedsport began construction of the project in September 2012, by installing a single floating gravity based anchor and auxiliary subsurface buoy.  However, this first phase of the project was unsuccessful and the auxiliary buoy sank.  Reedsport removed the buoy and associated tendon and outer mooring lines from the project area on October 17, 2013.  On February 28, 2014, Ocean Power Technologies notified the Federal Energy Regulatory Commission that it intended to surrender its preliminary permit for the 50 megawatt third phase, but left the first phase's license in place for the moment.

On May 30, 2014, Reedsport filed an application to surrender its license for project, stating that financial and regulatory challenges in developing the project have forced it to conclude that it cannot proceed with the development of the project.  The Commission accepted that license surrender by order dated August 14, to be effective following confirmation of the project's decommissioning.

With the Reedsport project shelved, no wave energy project currently holds a FERC license.  Several tidal projects have been licensed, one wave-based hydrokinetic project has secured a preliminary permit, and two other wave energy projects have pending applications for preliminary permits.  The ocean remains a demanding environment, and the economics of most wave energy projects are challenging.  Will others succeed where Reedsport OPT has not?

Hydrokinetic energy projects in 2014

Hydrokinetic energy projects generate electricity from moving water, capturing the power embodied in tides, waves, and currents without the use of dams.  Hydrokinetic energy resources are estimated to have a tremendous power potential -- according to one U.S. Department of Energy study, approximately 1,420 terawatt-hours per year, or approximately one-third of the nation's total annual electricity usage.  The technologies required are relatively new, do not have decades of operational experience, and remain relatively expensive.  Nevertheless, federal records show growth in hydrokinetic project development.

The Federal Energy Regulatory Commission regulates most hydrokinetic energy projects under its hydropower jurisdiction pursuant to the Federal Power Act.  Project developers may seek preliminary permits granting the right to study a particular site and priority to apply for a project license. 

Relatively few projects have received licenses to date.  In 2012, the Commission issued a pilot project license for the Roosevelt Island Tidal Energy project in the East River near New York City.  Last month, the Commission issued a pilot project license to the Public Utility District No. 1 of Snohomish County for a 600 kilowatt tidal project in Puget Sound, Washington.

As of last month, six projects have been issued preliminary permits that remain in effect:

• Ecosponsible, Inc.'s Niagara Community project, a 1.25 megawatt inland project proposed for the Niagara River in New York
• Ecosponsible, Inc.'s Niagara Community #2 project, a similar 1.25 megawatt inland project proposed for the Niagara River in New York
• Iguigig Village Council's Iguigig RISEC project, a 40 kilowatt inland project proposed for the Kvichak River in Alaska
• The Town of Edgartown, Massachusetts's Muskeget Channel Tidal Energy project, a 4.94 megawatt project proposed for the Muskeget Channel off the island of Martha's Vineyard
• Turnagain Arm Tidal Energy's Turnagain Arm Tidal project, a 240 megawatt tidal project proposed for Cook Inlet, Alaska
• Resolute Marine Energy, Inc.'s Yakutat project, a 750 kilowatt wave project proposed in the Gulf of Alaska

 As of March, another 15 applications for preliminary permits were pending before the Commission.

Oregon wave project permit surrendered

The developer of a proposed large wave energy project off the Oregon coast has surrendered a key federal permit for the project.

Waves lap islands off the Maine coast near Casco Bay, a more sheltered site than that proposed off Oregon.

Ocean Power Technologies subsidiary Reedsport OPT Wave Park, LLC had proposed a 50 megawatt project in the Pacific Ocean off the central Oregon coast.  This larger project was intended to follow on the heels of OPT's "Phase I" development, a 1.5 megawatt non-grid connected pilot project which in 2012 became the first U.S. wave project to win a license from the Federal Energy Regulatory Commission.

OPT also won preliminary permits from the FERC to study the feasibility of larger projects off Reedsport, including a 15 megawatt "Phase II" and the 50 megawatt "Phase III" project.  OPT's Phase III preliminary permit gave it three years to study the feasibility of the "Reedsport Expanded Project", after which OPT could seek a license to develop and operate the larger scale phases.

That permit was set to expire on February 28, 2014.  Given the technological, permitting, and community engagement challenges raised by developing any advanced energy project, many permittees find that they need more than 3 years to study a site.  The FERC allows such developers to seek successive preliminary permits, effectively extending the due diligence period for qualified developers able to show real progress.

But based on a February 28, 2014, FERC filing, OPT announced that it would not seek a successive preliminary permit at this time, and would instead surrender the Phase III preliminary permit.  In its filing, OPT acknowledged the significant efforts made by the state of Oregon to facilitate wave energy projects, but noted the challenges interposed by a cascading series of unforeseen delays:delays in the Phase I study and development processes, resulting delays in the Phase II consultation, licensing, study, and monitoring processes, and "increased project-related costs."  Ultimately, OPT noted that while it continues to evaluate its Phase I and Phase II implementation options, "OPT's plans for an expanded Phase III Project are sufficiently uncertain at this time that the company cannot justify requesting an additional three-year preliminary permit extension."

Meanwhile, last month another OPT affiliate announced an agreement with Lockheed Martin to develop a 62.5 megawatt wave energy project off the coast of Australia.  While it is tempting to read between the lines and surmise that the Australian permitting process, culture, or site conditions are more favorable than those in Oregon, OPT has given no concrete indication that this is the case.  Estimates of U.S. wave energy potential remain large -- with at least one report identifying a total available wave energy resource of 2,650 terawatt-hours per year.  Whether or not the expanded Oregon project returns to active development, the size of the resource points to continued interest in developing the U.S.'s marine renewable energy resources.

Pittsfield NH dam repowering project

As governments and businesses consider the hydroelectric potential of existing non-powered dams, competition is heating up to claim and evaluate the best sites.  Federal regulators yesterday resolved a conflict between two developers by awarding a preliminary permit to a developer interested in studying the feasibility of repowering or rebuilding hydroelectric energy production at an existing mill dam on the Suncook River in Pittsfield, New Hampshire.

Another former mill dam in the heart of a New England village: the Doughty Dam in North Berwick, Maine.

Yesterday's order by the Federal Energy Regulatory Commission (9-page PDF) granted a preliminary permit to KC Hydro LLC of New Hampshire to study the feasibility of the Pittsfield Mill Dam Hydropower Project.  Originally built for industrial purposes, the Pittsfield Mill Dam is currently owned by the New Hampshire Department of Environmental Services.

As described in KC Hydro's original permit application (11-page PDF), the project concept involved either restoring an existing but mothballed 415 kW turbine which previously operated under an exemption from licensing, or installing entirely new facilities (potentially with a 530 kW capacity) to capture the hydroelectric potential of the water already impounded behind the dam.

After KC Hydro submitted its preliminary permit, another developer - AMENICO Green Solutions, LLC - applied for a competing preliminary permit for the same site.  AMENICO proposed a similar project, which focused on restoring the existing 415 kW turbine.  AMENICO noted that it had property rights to the site, which it claimed KC Hydro did not.

Noting that the applications were comparable, FERC recited its standard for resolving the competing claims:

Staff has reviewed the applications and found no basis for concluding that either applicant’s plan is superior to the other. Neither applicant has presented a plan based on detailed studies or the results of agency consultation. Where the plans of the applicants are equally well adapted to develop, conserve, and utilize in the public interest the water resources of the region, the Commission will favor the applicant with the earliest application acceptance date.

Because KC Hydro had applied first, FERC awarded the preliminary permit to KC Hydro.  In doing so, FERC noted that a permit applicant is not required to have obtained all access rights to a project site as a condition of receiving a preliminary permit.  However, FERC did note that a preliminary permit does not grant a right of entry onto any lands, so a permittee must obtain any necessary authorizations and comply with any applicable laws and regulations to conduct any field studies.

With its preliminary permit in hand, KC Hydro now has 3 years to investigate the site and apply for a full project license.  Will the Pittsfield dam ultimately be repowered?

Proposed Long Canyon energy project

Last week the Federal Energy Regulatory Commission accepted for filing an application for a preliminary permit for a pumped storage project in the Utah desert.  In January, Utah Independent Power, Inc. filed for a preliminary permit.  The Long Canyon Pumped Storage Project would entail two dams to store water drawn from the Colorado River near Moab, Utah.  (Here's a topographic map of the general location.)

A water pipe buried in the desert soil in Arches National Park, near Moab, Utah.

Pumped storage projects are one way to store energy.  Electricity that is generated can be converted into potential energy stored in water by pumping it uphill.  That energy, or most of it, can be captured and converted back into electricity on command.

Utah Independent Power's application to FERC for a preliminary permit for the Long Canyon Pumped Storage Project (18-page PDF) provides some details on how the project might work.  Initially, water from the river would be pumped into the lower reservoir.  When electricity is abundant and low-priced, the project would consume electricity to pump water from the lower reservoir uphill to the upper reservoir.  When electricity is scarce or commands a high enough price, the project would release water downhill through turbines to produce up to 800 megawatts of hydroelectric energy.  In a typical pumped storage project, the same pumps used to send water uphill can be used as turbines when the water flows back down.  The owned of a pumped storage project seeks to earn profits by taking advantage of the difference between off-peak energy prices and the prices available during peak demand.

Now that the Commission has accepted the application for filing, the application is open for 60 days for public comment or a showing of interest in the site by a competing developer.  After that period, and after a technical and legal review of the application by Commission staff, the Commission may issue a preliminary permit to the applicant.  A preliminary permit does not authorize the permittee to actually construct anything; rather, it confers first priority of application for a license - what the Commission calls "guaranteed first-to-file status" - while the permittee studies the site and prepares to apply for a license, typically for a term of 3 years.

Cape Cod canal tidal energy project

A tidal energy project proposed for the Cape Cod Canal appears not to be moving forward, as ocean energy developer Free Flow Power's affiliate FFP Mass 1, LLC has surrendered its preliminary permit to investigate the site and its priority to seek a license for the project.

The project was proposed for the Cape Cod Canal and part of the Hog Island Channel, between Cape Cod Bay and Buzzards Bay.  The strong tidal currents and coastal geography combine to make the area near the south end of the canal attractive for energy projects.

As early as 2007, tidal energy developer Natural Currents Energy Services, LLC secured a preliminary permit to investigate stake a claim to the waters around the canal.  NCES's preliminary permit was canceled in May 2010 after it missed key deadlines for filing a draft license application and formal notice of intent documents.  At that point, the site went back up for grabs.

Three months later, another developer stepped forward, as FFP Mass 1 filed its application for a preliminary permit for the Cape Cod Tidal Energy Project. As described in the application, FFP's project would consist of up to 2,000 hydrokinetic generation units configured in a series of turbine arrays and turbine fields.  These turbines would be installed from the end of the Cape Cod Canal out southward into Buzzard's Bay, between Taylor Point (home to Mass Maritime Academy) and Hog Neck in Wareham.  FERC granted a preliminary permit later that year.

One year later, in October 2011, Free Flow Power asked FERC to accept its surrender of the preliminary permit for the Cape Cod Tidal Project.  FFP stated that it had completed initial diligence on the project, and that based on the results of that diligence, "FFP has decided not to pursue the licensing of this project".

FERC has now issued an order accepting the surrender of the permit.  FFP Mass 1's preliminary permit will remain in effect until the close of business on March 4, 2012.  Only after that permit expires will the Commission consider new applications for this site, at which point the rights to the site will again be up for grabs.  Given the site's potential, another developer may materialize, or either previous permittee could seek to claim the site in the future. 

Who will be next to try the Cape Cod Tidal Energy Project?

Quick draw for hydrokinetic priority

Last year, I noted the "gold rush" aspect of hydrokinetic energy development in the US, as developers raced to the Federal Energy Regulatory Commission to file claims on promising sites.  Some of the most obvious areas for hydrokinetic development, such as the Mississippi River system, generated hundreds of applications for preliminary permits which would grant exclusive rights to study the site and prepare a first-priority license application within three years.

In some cases, multiple developers applied for a preliminary permit for the same site.  Whoever files a valid application first is given first priority; developers filing an application for the same site later face an uphill battle as competing applicants.

In the heat of the gold rush, sometimes multiple applications come in with identical filing times.  How does FERC resolve these disputes?  A quick draw?

A random drawing, as it turns out.  As long as the Commission believes that none of the applicants’ plans is better adapted than the others to develop, conserve, and utilize in the public interest the water resources of the region at issue, FERC uses a random drawing to resolve disputes over who gets to count as having been there first.

The Commission has used random drawings to assign priority to competing applications with identical filing times since at least 2009, when it granted first priority for a site to the city of Angoon, Alaska, defeating the cities of Petersburg and Wrangell.  Since then, it has issued notices announcing filing priority for preliminary permit application at least 33 more times, most recently resolving ten disputes by random drawing this past Wednesday.

The need for such a mechanism highlights the booming interest in many high-value sites for generating innovative hydroelectricity without building new dams.  The hydrokinetic quick draw may be a sign that the most promising sites have attracted competitive interest, even if the means of picking a temporary winner (typically a term of three years) is ultimately random.

Municipal hydrokinetic energy

Interest is increasing in municipal hydrokinetic energy projects, as cities and towns consider whether they should generate renewable electricity from their water resources.  Hydrokinetics entails generating electricity from moving water such as tides, waves, and free-flowing rivers.  Towns, states, and national governments may not only have an interest in generating power for their citizens, but may also have advantages in project development such as lower financing costs.

For example, the town of Wiscasset, Maine is considering whether to pursue a project togenerate electricity from tidal power in the Sheepscot River. The town thinks that tidal currents and flowing water in the Sheepscot could be used to generate electricity using hydrokinetic technology.  In 2008, the town applied to the Federal Energy Regulatory Commission for a preliminary permit to study the feasibility of the project. Wiscasset proposed to deploy a series of hydrokinetic turbine generating units in the tidal Sheepscot, along with associated transmission facilities. Currently, Wiscasset appears to be considering using the RivGen units under design by ORPC.

In May 2009, the FERC granted Wiscasset its preliminary permit. Preliminary permits confer the right to investigate the feasibility of a hydropower project, typically for a three-year term. Preliminary permits do not authorize actual construction; to actually build and operate a hydrokinetic or hydroelectric project generally requires a FERC license or exemption. The holder of a preliminary permit does have first priority to file for a full license as long as the preliminary permit remains in effect, and FERC expects permittees to make progress toward ultimate licensure. (For example, in September 2011 a company affiliated with ORPC used its preliminary permit priority to file a pilot license application for the Cobscook Bay Tidal Energy Project.)

Next spring, the town faces a key deadline if it chooses to seek a hydrokinetic pilot project license for the project. Wiscasset’s preliminary permit is set to expire on April 30, 2012. Filings in the project’s FERC docket suggest that the town may seek to extend that deadline. For example, in a May 2011 filing, the town said, “we anticipate the Wiscasset Project will apply for a successive Preliminary Permit in May 2012”.

Generally, preliminary permits expire after three years, after which the original permittee has no special rights to the site. In certain circumstances, federal regulators can grant successive preliminary permits. For example, FERC has given several municipal hydroelectric projects successive preliminary permits when the towns need more time. Even this requires a showing of diligent efforts to investigate the project’s feasibility and partial progress toward readiness for a license application.

In Wiscasset’s case, other deadlines within the preliminary permit process have already been extended. For example, the 2009 preliminary permit required the town to submit a Notice of Intent and draft license application in May 2011. Instead of filing these pre-application documents, the town chose to ask FERC for an extension to allow more site studies and stakeholder consultation. FERC allowed the town more time, but only until the preliminary permit expires on April 30, 2012. FERC may give the town similar leniency if it applies for a successive preliminary permit this spring. On the other hand, FERC promotes competition and discourages “site-banking”; if someone else showed interest in developing the Wiscasset site, FERC might be less inclined to issue the town a successive preliminary permit.

Wiscasset has until the end of April 2012 to either file a license or seek its successive preliminary permit.  If Wiscasset moves forward, the Sheepscot hydrokinetic project could be an example of how towns can benefit from their renewable energy resources.

July 5, 2011 - ambitious Mississippi River hydrokinetic projects up close

Staking a claim to a site for a hydrokinetic energy project can feel a bit like the wild West.  A recent flap over rights to study and seek licenses for hydrokinetic projects in the lower Mississippi River illustrates the challenges of the race to get a permit, and the changing ways in which regulators evaluate permit applications.

A weathered boathouse on the rocky shore of Islesford, Maine.

I've already noted the significant interest in developing the hydrokinetic resources of the lower Mississippi River.  Developers have filed about 300 preliminary permit applications for Mississippi River hydrokinetic projects, with two developers -- Free Flow Power Corporation and Northland Power -- applying for the vast bulk of the sites.  As of April 2011, Free Flow Power had 24 active permits for the Mississippi River, with applications filed for another 105 river sites.  Northland has applied to the Federal Energy Regulatory Commission for preliminary permits at 40 sites along the same reach, 28 of which Free Flow Power is also pursuing.

This flood of interest in preliminary permits for hydrokinetic projects in the Mississippi River appears to have taken federal regulators by surprise.  Between the applications filed by these two developers, preliminary permits have been sought or awarded for 141 sites covering nearly all of this 850-mile reach of the Mississippi River.  On April 1, 2011, the director of FERC's Office of Energy Projects sent a letter to these two developers, expressing skepticism that two companies could actually develop and file license applications for more than a small fraction of the sites during the short term of the preliminary permit.  (Recall that a preliminary permit just stakes a temporary claim to a site; to build and operate a project, a full project license is generally required.)  The director's letter also expressed concern over letting two applicants tie up so much of the river.  Based on these concerns, the letter noted that Commission staff intended "to decline to issue additional permits on this stretch of the river, and instead allow potential developers to advance their projects through the Commission’s licensing process."

In response, Northland Power pointed out that a Commission policy to deny permits would prevent Northland from studying the sites enough to know if it wanted to file a license application, let alone from promoting competition and developers' reasonable rights to reserve sites.  Free Flow Power noted that the timing and standards of the Commission's Integrated Licensing Process make it "impossible" to file a complete license application within the 3-year term of a preliminary permit.  As a concession to FERC's interest in competition, Free Flow Power also trimmed back its request for permits, withdrawing 58 of the 60 new preliminary permit applications for the Mississippi (representing 419 river miles) and choosing not to seek successive permits for a handful of sites whose preliminary permits had expired. 

This twin-pronged message  -- supporting competition and offering compromise  -- apparently worked.  In letters to the developers dated June 9, 2011, FERC staff noted, "After reviewing all of the resulting filings, staff has determined that it is appropriate to continue processing permit applications on the lower Mississippi River at this time."  

(FERC accepted for processing 43 of Free Flow Power's applications for permits, and incidentally told Northland Power that 40 of its permit applications were deficient for failing to include geographic information about the project and adjacent communities, requesting additional information within 30 days.  As of July 4, 2011, FERC's eLibrary system did not yet show any follow-up from the developer.)