FERC Order 800 conforms the Commission’s regulations to the Hydropower Regulatory Efficiency Act (“HREA”) of 2013. Representative Cathy McMorris Rodgers of Washington’s 5th District sponsored the Act for the purpose of stimulating interest and commitment among hydropower developers to retrofit pre-existing non-power dams with electric power generation infrastructure. Under the Act, Congress also sought to reduce the costs and regulatory burdens associated with the study and licensing phases of hydropower development. More specifically, the Act amends the Federal Power Act’s provisions regarding hydropower preliminary permits and licensing exemptions.
A preliminary permit empowers the holder with the exclusive right to apply for a hydropower project license or license exemption for a specified project site. FERC honors the exclusivity rights of the holder for a maximum period of three years. After that time, competing project developers may apply for a preliminary permit in an effort to usurp the incumbent holder’s exclusive rights. Under the New Act, FERC has the discretion to extend incumbent permit holder’s exclusivity rights for an additional two years. This regulatory revision allows incumbent holders more time to complete ongoing and lengthy project feasibility studies without the prospect of ultimately losing the project to another developer. Such a loss is a devastating blow to a permit holder’s investment, and at times may stunt overall project development.
The Hydropower Regulatory Efficiency Act increased the range of projects that are eligible for license exemptions under the Federal Power Act. Under the Act, both categories of exempt projects including: (1) small conduit hydroelectric facilities; and (2) small hydroelectric power projects remain the same. Instead, Congress sought to expand the exemption provision to allow for a broader array of project specifications and logistics.
A small conduit hydroelectric facility (“small conduit facility”), as defined in Section 30 of the FPA, is an existing or proposed hydroelectric facility that utilizes for electric power generation the hydroelectric potential of a conduit, or any tunnel, canal, pipeline, aqueduct, flume, ditch, or similar man made water conveyance that is operated for the distribution of water for agricultural, municipal, or industrial consumption and not primarily for the generation of electricity. Prior to the enactment of the HREA, small conduit facilities could not be located on federal land. Section 30 of the FPA is now amended to allow for the construction of small conduit facilities on federal land. The HREA has prescribed a special criteria for a new subcategory of small conduit facilities referred to as “qualifying conduit hydropower facilities”. An eligible facility is a non-federally owned conduit that does not require the utility of a dam or impoundment with an installed capacity of 5 megawatts or less. The facility must not be licensed under, or exempted from, the license requirements in Part I of the FPA on or before the date of enactment of the Hydropower Efficiency Act (i.e., August 9, 2013). A developer must file a notice of intent to construct a qualifying conduit hydropower facility with FERC to demonstrate that the proposed project meets the aforementioned prescribed criteria.
A small hydroelectric power project (“small hydro project”), as defined in the Public Utilities Regulatory Policies Act of 1978 (“PURPA”), is a project that utilizes for electric generation the water potential of either an existing non-federal dam or a natural water feature (e.g., natural lake, water fall, gradient of a stream, etc.) without the need for a dam or man-made impoundment. The HREA amended Section 405 of PURPA exempting small hydro projects that have an installed capacity of 10 megawatts or less. Previously, PURPA only exempted projects with a maximum of 5 megawatts of installed capacity or less.
Materials on how to file a preliminary permit may be obtained here. Order 800, which includes the text of the revised regulations starting on page 18 may be viewed here.