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.

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.

Nicatous Lodge proposes off-grid micro-hydro project

A Maine sporting camp has proposed developing an off-grid micro-hydropower project to provide it electricity.  Nicatous Lake Lodge and Cabins LLC proposes to develop the micro-hydro project at its remote property near Burlington, Maine.  A filing made by the camp earlier this spring has triggered a federal review process to evaluate whether the project will require a license or exemption under the Federal Power Act.

Under federal law, most hydropower projects cannot be constructed, operated, or maintained without licensing under the Federal Power Act.  But some projects -- typically off-grid or remote ones -- fall outside the Federal Power Act's jurisdiction.  To reduce uncertainty about what regulations might apply, Section 23(b)(1) of the Federal Power Act requires an entity proposing a new project to file with the Federal Energy Regulatory Commission either a hydropower license application, or a Declaration of Intention to determine if the proposed project requires a license.

When a developer files a Declaration of Intention with the Commission, the Federal Power Act requires the Commission to investigate and determine if the project would affect the interests of interstate or foreign commerce. The Commission also determines whether or not the project: (1) would be located on a navigable waterway; (2) would occupy public lands or reservations of the United States; (3) would utilize surplus water or water power from a government dam; or (4) would be located on a non-navigable stream over which Congress has Commerce Clause jurisdiction and would be constructed or enlarged after 1935.  Each of these evaluations supports a key jurisdictional finding under the Federal Power Act; collectively, they can determine whether or not licensing is required.

Other recently proposed micro-hydro projects illustrate how the Commission evaluates whether or not a license or exemption will be required.  For example, the Commission found that licensing or exemption was required for the Patton Colorado Hydropower Project, which would be grid-tied -- but that no license is required for the Egnaczak Net Zero Hydro Project in Massachusetts, which would have no connection to the interstate electric grid.

This jurisdictional determination is now underway for the Nicatous micro-hydro project.  On March 15, 2016, the sporting camp owner submitted a Declaration of Intention to the Federal Energy Regulatory Commission.  That Declaration of Intent describes the project site as about 15 miles away from the nearest electric utility grid, where Nicatous Stream leaves Nicatous Lake.  The project does not rely on a dam, although the remains of a former dam are located nearby.  Instead, an intake in the lake would supply water to a low head (60 inches or less) PowerPal micro-hydroelectric generator, rated at 1,000 watts power.  Power from the generator would be fed into the lodge's electric system, not which is not connected to any utility grid.

On May 10, 2016, the Commission issued its notice of the filing, setting a 30-day deadline for filing comments, protests, and motions to intervene.  Commission action on the filing could follow later this year.

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.

FERC and microhydro licensing

Federal energy regulators have ruled that a micro-hydroelectric project proposed in New York cannot be constructed or operated without a license.

The proposed Henson Micro Hydroelectric Project would be located on the West Branch of Onondaga Creek, near Onondaga, New York.  It would include an existing 14-foot-high concrete dam, plus new construction including a penstock, a powerhouse, and a 10 kilowatt generating unit.  The dam was rebuilt in 2002, and had previously been used to power a grist mill.  The project developer, an individual, proposed to use the project power to provide electricity to his home and barn.
 
In his declaration of intention, the developer described himself and his approach to project development and compliance:

I would like to point out that I am not a corporation, or a rich man just a simple middle class Joe. I am an hourly employee at AT&T. Although blessed beyond what I actually deserve, I do not have a bunch of money that I could spend. In fact I am using funds recently obtained from a loss of use settlement from the NYS Workers Compensation Board to fund this. I am trying to do the right thing for the environment and save some money on my power bill. I am hoping that we can work this out to everyone’s satisfaction based upon the material and information that I currently have available. Of course, if additional information is required by you folks I will do everything to comply.

Identifying what approvals are necessary is a core step in developing any project.  Under section 23(b)(1) of the Federal Power Act, a non-federal hydroelectric project must be licensed by the Federal Energy Regulatory Commission (unless it has a still-valid pre-1920 federal permit) if it:

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

To reduce uncertainty over whether a project will require licensing, a developer may file a Declaration of Intention with the FERC describing the project.  Following public notice and an opportunity for protests, comments, and motions to intervene, FERC will rule on the jurisdictional questions raised by the declaration.

In the Henson project's case, the developer filed a Declaration of Intention on December 18, 2015.  That declaration was supplemented; after the second supplement, FERC issued its public notice of the declaration.  No protests, comments, or motions to intervene were filed.

On May 10, FERC issued its ruling on the declaration, finding that licensing is required.  FERC easily found that the project would not occupy any public lands or reservations of the United States or use surplus water or waterpower from a Federal government dam.  It found "insufficient evidence" to determine whether the West Branch of the Onondaga Creek is navigable.

However, FERC found that the West Branch of Onondaga Creek is a headwater or tributary of the Oswego River, a navigable water of the United States.  As a result, FERC concluded the project would be located on a "Commerce Clause stream."  FERC noted the project would be constructed after 1935.

FERC also concluded that the project would affect interstate commerce through its connection to the interstate grid, relying on precedent that "small hydroelectric projects that are connected to the interstate grid affect interstate commerce by displacing power from the grid, and the cumulative effect of the national class of these small projects is significant."  Thus even though the Hanson project's developer proposed using project power for the onsite home and barn, the fact that those buildings were grid-tied drove FERC to conclude that licensing was required. 

On this reasoning, FERC concluded that construction, operation, and maintenance would require a license.  As an alternative, FERC suggested the developer consider applying for an exemption from licensing as a small hydroelectric power project.


By contrast, another recent FERC decision concluded that a micro-hydro system proposed in Massachusetts did not require licensing, because (among other reasons) neither the project nor the structures it would serve would be grid-tied.  Thus whether or not the project and the facilities it serves are grid-tied or off-grid can be an important factor in whether a FERC hydropower license is required.

FERC rules off-grid micro-hydro needs no license

Federal hydropower regulators have granted reconsideration of a 2015 order finding licensing required for an off-grid micro-hydropower project proposed in Massachusetts.  Based on newly submitted evidence that the proposed project would not be connected to an interstate grid, the order granting reconsideration finds that Section 23(b)(1) of the Federal Power Act does not require licensing of the proposed Egnaczak Net Zero Hydro Project.

The case involves a project proposed by Kenneth and Susan Egnaczak, to be located at an existing water-powered mill complex on the Hoosic River in Cheshire, Massachusetts.  The so-called "Egnaczak Net Zero Hydro Project" would have a total generating capacity of 10.7 kilowatts.  The power would be used at a home and workshop proposed for construction along the river.

Under Section 23(b)(1) of the Federal Power Act, an entity proposing a hydropower project must generally file with the Federal Energy Regulatory Commission either a hydropower license application, or a Declaration of Intention to determine if the proposed project requires a license.  The Egnaczaks filed a Declaration of Intention for the project in February 2015.  On September 11, 2015, Commission staff issued an order finding that the Federal Power Act requires a license to be issued for the project's construction, maintenance, and operation.

Section 23(b)(1) of the Federal Power Act requires a non-federal hydroelectric project to be licensed if it falls into any of four categories: (1) is located on “navigable waters of the United States;” (2) occupies lands or reservations of the United States; (3) uses surplus water or water power from a federal dam; or (4) is located on a non-navigable stream which is subject to the authority of Congress under the Commerce Clause, affects the interests of interstate or foreign commerce, and is constructed or enlarged after August 26, 1935.

In its September 2015 order on the Egnaczak project, Commission staff analyzed the facts as applied to these facts.  On category 1, staff found that there is insufficient evidence to determine whether the Hoosic River is navigable at the project site.  Staff readily dispensed with categories 2 and 3, finding that the project would neither occupy any public lands or reservations of the United States nor use surplus water or waterpower from a Federal government dam.

In September, staff found that the project fell into the fourth category.  In the order, staff noted that it would be located on a non-navigable Commerce Clause stream, would be constructed after 1935, and would affect the interests of interstate commerce because the project would offset both electrical and heating needs for the applicants’ home and workshop that would have been otherwise supplied by the interstate grid.  The order cited judicial precedent, noting, "It is well settled that small hydroelectric projects that are connected to the interstate grid affect interstate commerce by displacing power from the grid, and the cumulative effect of the national class of these small projects is significant for purposes of FPA section 23(b)(1)." Staff therefore determined that the project requires licensing under FPA section 23(b)(1).

But on January 6, 2016, the applicants filed a request for reconsideration and additional evidence in support of their argument that the project does not require licensing.  This evidence focused on the fact that the project would not be connected to the interstate grid and thus would not affect interstate commerce.  As later described by the Commission:

They state that, because neither their home nor workshop has been constructed, they have no existing grid connection. Further, they explain that the project alone will power their home and workshop. The applicants state that the project would produce hydro-mechanical power using a waterwheel, Archimedes Screw, or turbine. The mechanical power would be connected to the hydro generator units to produce electricity or to power rotating equipment, such as a sawmill. In addition, the applicants state that they will use backup power from a fossil fuel electric generator and storage batteries, which would be charged by the hydro generators or the fossil fuel electric generator.

In a March 24, 2016 order, the Commission staff found that the applicants had demonstrated that the Net Zero Project would not be connected to an interstate grid.  That order finds that the micro-hydro project would not displace power that would otherwise be supplied by the grid and thus would not affect interstate commerce.  As a result, it concludes that "section 23(b)(1) of the FPA does not require licensing of the proposed Net Zero Project."

The March 24 order does include a warning: "if the project or the applicants’ unconstructed home or workshop are connected to the interstate grid in the future, section 23(b)(1) of the FPA would require licensing and the Commission could require the applicants to apply for a license under section 4(g) of the FPA."

Thus in at least this one case, the off-grid nature of the micro-hydro project was a critical factor in the order finding that Section 23(b)(1) of the Federal Power Act does not require licensing of the proposed Egnaczak Net Zero Hydro Project.  The key to the revised finding that the project would have no effect on interstate commerce appears to be the fact that power would be consumed in buildings not yet built, with no existing grid tie.

FERC holds CO microhydro needs license

In an order issued earlier this month, the Federal Energy Regulatory Commission found that the developer of a micro-hydropower project proposed in Colorado must obtain a license for the Patton Colorado Hydropower Project's construction, maintenance, and operation.  The order illustrates one challenge facing small, distributed hydroelectric projects in the U.S.: a federal regulatory process that at times can treat microhydro projects much like traditional large dams, despite interest in a streamlined permitting process for small projects.

At issue is Section 23(b) of the Federal Power Act.  It provides that any person intending to construct project works on a non-navigable commerce clause water must file a declaration of their intention to do so with the Commission. Section 23(b) further provides that upon the filing of a Declaration of Intent, the Commission will investigate the proposed project, and, if it finds that the “interests of interstate or foreign commerce would be affected” by the proposed project, then the person intending to construct the project must obtain a Commission license before starting construction.

Under section 23(b)(1) of the Federal Power Act, 16 U.S.C. § 817(1), a non-federal hydroelectric project must be licensed (unless it has a still-valid pre-1920 federal permit) if it:

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

On May 11, 2015, as supplemented on November 10, 2015, Steve Patton filed a Declaration of Intention with the Commission concerning the proposed Patton Colorado Hydropower Project.  The project would be located on Colombine Creek, a feeder stream to the South Fork of the Rio Grande, near the town of South Fork, Mineral County, Colorado.  It would consist of an intake and pipes feeding a gravitation water vortex-type generating unit rated between 2 and 10 kilowatts with 2.5 feet of head, transmission line, and appurtenant facilities. The proposed project would be connected to the interstate electric grid.

In the case of the Patton Colorado Hydropower Project, the Commission found that licensure is required under the fourth prong of Section 23(b)(1) of the Federal Power Act, which itself has three components.

First, the Commission found that the Patton project would be located on a "Commerce Clause stream."  Specifically, the Commission found that Colombine Creek is a headwater or tributary of the South Fork of the Rio Grande, which is a tributary of the Rio Grande River, a navigable water of the United States.  Under a 1965 Supreme Court precedent, for purposes of FPA section 23(b)(1), the headwaters and tributaries of navigable rivers are Commerce Clause streams.

Second, the project would be constructed after August 26, 1935. 

Third, citing a 1992 opinion from the 11th Circuit Court of Appeals, the Commission noted, "It is well settled that small hydroelectric projects that are connected to the interstate grid affect interstate commerce by displacing power from the grid, and the cumulative effect of the national class of these small projects is significant for purposes of the FPA section 23(b)(1)."  Thus the Commission concluded that the Patton Colorado Hydropower Project would affect interstate commerce through its connection to the interstate grid.

Based on these conclusions, the Commission found that in accordance with section 23(b)(1) of the Federal Power Act, the applicant must obtain a license for the construction, maintenance, and operation of the Patton Colorado Hydropower Project.  The Commission also ruled that no construction or operation of the project may commence until a license has been obtained.

Notably, the Commission was able to reach this conclusion without making a navigability finding for Colombine Creek itself.  In particular, the order notes "insufficient evidence to determine whether Colombine Creek is navigable." But because the Commission found licensing to be required on other grounds -- grounds derived from the ultimate navigability of a downstream river -- it did not make a navigability finding for the river reach where the project would be located.

The Commission's order did suggest that an easier path may be available for the Patton Colorado Hydropower Project.  In particular, the order notes that the project may be eligible for an exemption from licensing.  It suggests that the applicant consider applying for a small hydroelectric power project exemption of 10 megawatts (MW) or less.  This more limited approval could enable project development and operation through a more streamlined regulatory processes than that required for a full project license.

Incentives and policy support for microhydro projects are growing.  But as the Patton Colorado Hydropower Project case before the FERC illustrates, even small hydropower projects may be subject to federal regulation.  For some projects, an exemption may be available, but others may not be able to be developed without a FERC license.  Even an exemption can take time and expense to secure, and it can be hard to preduct the outcome of an application for an exemption.  How does this dynamic affect the rate of development of U.S. micro-hydropower projects?

MA considers expanding net metering for small hydro

Massachusetts energy regulators are investigating whether to allow more small hydroelectric projects to benefit from a policy known as "net metering."
 
Net metering allows electric customers with their own small generators to sell the power they produce to the utility grid, offsetting the customer's bill for power purchased from the grid.  This effectively incentivizes electricity consumers to develop customer-sited generation that can generate power at a lower cost than grid-delivered power.  Many states have adopted net metering programs to encourage renewable and other distributed generation.  Most states' programs are restricted by size (a project's maximum generating capacity, or the program's total enrolled capacity) and by technology (e.g. solar photovoltaics usually qualify, but coal usually doesn't).

Massachusetts' current version of net metering allows customers to qualify by installing any type of generating facility, including a hydroelectric facility, as long as the facility is smaller than 60 kilowatts.  Size limits are larger for certain projects powered by wind, solar photovoltaics, or anaerobic digestion, as well as for farm-related "Agricultural Net Metering Facilities" -- up to 2 megawatts for most such projects, or 10 MW for some publicly owned facilities.  But under Massachusetts' current rules, hydroelectric facilities that are larger than 60 kW and are not Agricultural Net Metering Facilities are not eligible for net metering.

Whether that restriction makes sense is now the subject of an investigation by the Massachusetts Department of Public Utilities.  The 2014 enactment by the state legislature of An Act Relative to Credit for Thermal Energy Generated with Renewable Fuels, Chapter 251 of the Acts of 2014, directed the Department to study the feasibility, impacts and benefits of allowing customers to net meter electricity generated by micro-hydro and other small hydroelectric facilities.  The Act directed the Department to develop a report based on this analysis, and to submit the report to the legislature by July 1, 2015.

The Massachusetts DPU opened its investigation on October 16, 2014.  In the Department's order opening the investigation, it posed 13 questions to the public.  Topics ranged from the proper definition of "small hydroelectric" to the pros and cons of allowing new or existing small hydroelectric projects to net meter.   Written comments on these questions are due by the close of business on December 5, 2014.  In addition, the DPU held a technical conference on November 7 at which these issues were explored.

What will the Massachusetts Department of Public Utilities find regarding net metering and small hydroelectric projects?  How will the state legislature respond to the DPU's report expected this coming summer?  Will Massachusetts expand net metering opportunities for small hydropower?