United States: New Opportunities For Hydro?

Last Updated: August 19 2013
Article by Amy S. Koch

Most Read Contributor in United States, October 2017

On August 9, 2013, President Obama signed into law two pieces of legislation designed to foster the development of new hydropower in the U.S. Both bills, the Hydropower Regulatory Efficiency Act of 2013 (HREA) and the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act (Reclamation Act Amendment), were passed in both houses of Congress with significant bipartisan support.

Key findings in HREA focused on the fact that only about 3 percent of the 80,000 existing dams in the U.S. have hydropower generation, and that the legislation could create 700,000 new jobs over the next 13 years, based on a Navigant study finding that the U.S. could add approximately 60,000 MWs of new hydro capacity by 2025.

The Hydropower Regulatory Efficiency Act

What does the HREA actually do? It removes from FERC jurisdiction certain small conduit hydropower projects and allows slightly larger conduit and conventional hydroelectric projects to qualify for exemptions from licensing. While these reforms are helpful, they do not address 401 water quality certificate issues or environmental and natural resources review issues. However, the projects that will benefit from the reforms are typically not the type of projects where water quality, environmental or natural resource issues are project killers.

Small Hydro at Dams: HREA amends Section 405 of the Public Utility Regulatory Policies Act (PURPA) to double the capacity from 5 MWs to 10 MWs that a proposed project may have in order to be eligible for an exemption from licensing under Part I of the Federal Power Act (FPA). The 10 MWs limit would, at a minimum, apply to projects subject to FERC's Part I Subpart K regulations governing small hydro projects to be located at non-federal, pre-1977 dams, or using natural water features. If only federal lands are involved, any applicant is eligible. If some federal lands are involved, any applicant who has all the real property interests in the non-federal lands necessary to develop and operate the project or an option to obtain the interests, is eligible. (Holders of exemptions from licensing cannot use the eminent domain powers granted to licensees under FPA Part I.)

Conduit Projects: HREA amends Section 30 of the FPA in two ways:

  • It creates a new expedited process to except from FERC jurisdiction qualifying conduit projects under 5 MWs. This new process requires a developer of such a project to file a notice of intent with FERC showing that its project meets "qualifying criteria," i.e., the facility (i) will use the hydropower potential of a non-federally owned conduit, (ii) will have an installed capacity that does not exceed 5 MWs, and (iii) is not already subject to a FERC license or exemption. HREA also provides for an expedited regulatory process that, absent a contesting party, should be completed within 60 days of submission of the notice of intent.
  • It amends FPA Section 30 to increase FERC's current conduit exemption process limitation from 15 to 40 MWs.

Note that under HREA, qualifying conduit projects under 5 MWs that go through the new notice process will not be subject to FERC licensing jurisdiction – which is different from being exempted from FERC licensing jurisdiction. In the latter case, a project is subject to FERC jurisdiction, but exempted from regulation. Essentially, the lack of FERC jurisdiction over qualifying conduit projects should mean that such projects should not be subject to the types of terms and conditions that FERC applies to exempted projects because FERC will have no authority over such qualifying facilities to begin with.

Extension of Preliminary Permit Terms: HREA also grants FERC the authority to extend the term of a preliminary permit (currently three years under Section 5 of the FPA) once, for a period up to two years, if it finds that the permit holder "has carried out activities under such permit in good faith and with reasonable diligence." Preliminary permits are essentially placeholders for potential license applicants; they grant a potential license holder a priority over other potential license applicants while it prepares a license application for filing. FERC 's new authority to extend a preliminary permit an additional two years should be very helpful to license applicants grappling with FERC's pre-filing licensing processes.

Study of a Two-year Licensing Process for Existing Dams and Closed-Loop Pumped Storage: HREA also requires FERC to study the feasibility of a two-year license process for closed-loop pumped storage projects and projects at non-power dams. If practicable, FERC is required to develop and implement a pilot project to test a two-year process within 180 days of the effective date of HREA. FERC is also required to report to the House Committee of Energy and Senate Committee on Energy and Natural Resource within 180 days if it cannot implement a pilot program, and within 60 days of a final workshop if a pilot program is implemented.

DOE Pumped Storage Retrofit Study: HREA also requires the Department of Energy to conduct a study of the technical feasibility of retrofitting existing pumped storage facilities for the support of intermittent renewable generation within one year. No appropriations were included for the study. The House Report on HREA, H.R. 113-6, stated that the Congressional Budget Office found that the costs would be negligible because the proposed study is similar to ongoing DOE efforts to analyze the potential for developing hydropower resources.

The Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act (Reclamation Act Amendment)

While HREA deals with conduit projects at non-federal facilities, the Reclamation Act Amendment attempts to "jumpstart" hydropower development on Reclamation conduits by reducing administrative and regulatory costs, while protecting the Congressionally authorized purposes of these facilities from any unmitigated financial or physical impacts as a result of such development, according to the House Report on the legislation, H.R. 113-24.

The Reclamation Act Amendment explicitly grants the Secretary of Reclamation new authority for the "lease of power privilege,'' which would give a non-federal entity the right to generate hydropower and pay a rental fee to the federal government for such generation at a specific Reclamation facility.

The Reclamation Act Amendment requires Reclamation to offer the "lease of power privilege" first to the entity operating the conduit or the conduit's direct beneficiaries. Most Reclamation water supply and delivery projects have an arrangement where operation and maintenance activities are transferred to the local water beneficiary as a way to reduce paperwork and other costs. This ''right of first refusal'' provision would significantly decrease conduit hydropower planning and study time by reducing staffing costs and time affiliated with analyzing competing and multiple conduit development applications. If the water beneficiary refuses development under Reclamation's terms and conditions, Reclamation could consider other proposals.

The Reclamation Act Amendment attempts to reduce duplicative regulatory costs and paperwork, by exempting ''small conduit hydropower'' (5 MWs or less) from NEPA, while retaining NEPA application for larger installations and for transmission siting on federal lands.

Each facility would still be subject to environmental laws such as the Clean Water Act and other laws that could require permits – except a FERC license or exemption from licensing. Under the new legislation, the House Committee Report states:

. . . the jurisdiction over small hydropower development by private entities on all bureau irrigation canals and conduits lies solely with the bureau. Under current law, the bureau or the Federal Energy Regulatory Commission (FERC) has jurisdiction over hydropower development at such facilities.

Will They Work?

Both pieces of legislation do streamline certain permitting requirements for small hydro projects, conventional and conduit, but the notion that these reforms could lead to the development of a full 60,000 MWs of new hydro capacity by 2025 is a bit optimistic. Market price realities and other development impediments also will affect the amount of development that actually will take place. Nevertheless, these new statutes do address some long-festering problems for the hydropower industry and should help entice developers to seriously look at new projects at existing dams and at new conduit projects at federal and non-federal facilities.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.