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Breaking News: Hydro Currents

FERC issues 27 licenses, exemptions in 2010

The Federal Energy Regulatory Commission (FERC) has released an Energy Infrastructure Update for December 2010 that includes its hydropower activities for the month and for the year to date.

Previously used as an in-house tool, the monthly update is to be made public in future.

FERC issued 27 hydro licenses and exemptions in 2010, totaling 40.76 MW, all for conventional hydro projects. Of that total, six were licenses totaling 15.297 MW, seven were (maximum) 5-MW exemptions totaling 2.117 MW, and 14 were conduit exemptions totaling 23.347 MW.

FERC approved the largest increase in hydropower capacity for the year in the form of capacity amendments to existing projects. The commission issued 12 capacity amendments totaling 110.234 MW.

Applications were filed in 2010 for 30 licenses and exemptions totaling 89.142 MW. Of those, nine were for licenses for conventional hydro totaling 76.905 MW, two were for hydrokinetic licenses totaling 2.5 MW, three were for conventional 5-MW exemptions totaling 1.165 MW, one was for a hydrokinetic 5-MW exemption of 50 watts, and 15 were for conventional conduit exemptions totaling 8.572 MW. Applications also were filed for 17 capacity amendments totaling 166.438 MW.

The seven conventional projects placed in service in 2010 included three licenses totaling 15.54 MW, two 5-MW exemptions totaling 270 kW, and two conduit exemptions totaling 763 kW. There was one capacity amendment placed in service during 2010 of 600 kW.

Hydro comprises 8.75 percent of U.S. generation

Citing figures from Ventyx Global LLC, the FERC update said U.S. electricity installed capacity totals 1,132.68 GW. Waterpower totals 99.1 GW, or 8.75 percent of the total.

Among its highlights for December, the update said FERC issued (maximum) 5-MW exemptions for the 360-kW Slatersville project in Rhode Island and 310-kW Humphreys project in Colorado. It also issued five conduit exemptions totaling 6.036 MW and two capacity amendments totaling 49.367 MW.

Also in December, Fairlawn Hydroelectric Co. LLC filed an application to license the 14-MW Jennings Randolph project in Maryland and West Virginia, and Verdant Power LLC filed a final pilot hydrokinetic license application for the 1-MW Roosevelt Island Tidal Energy project in New York. Applications were filed for one conduit exemption of 1.3 MW and one capacity amendment of 20 MW.

The December 2010 update may be obtained at www.ferc.gov/legal/staff-reports/01-19-11-energy-infrastructure.pdf.

Hydro-Quebec, Innu reach Romaine project deal

The Innu of Uashat Mani-Utenam have reached a C$125 million (US$125.8 million) agreement-in-principle with Quebec to allow provincial utility Hydro-Quebec to run transmission lines through their ancestral territory. The tentative deal is over Hydro-Quebec's 1,550-MW Romaine hydro project on the Romaine River on the province's Lower North Shore.

The Innu signed an agreement with the utility that will see them receive $80 million in cash over the next 50 years, local media reported. The remaining $45 million will take the form of contracts to be allocated to the community of 4,000 during the construction of power lines to transmit electricity from the four dams to be built on the Romaine River near Sept-Iles, about 600 kilometers northeast of Quebec City. The $6.5 billion Romaine project is set to begin producing power in 2020.

In exchange, the Innu agreed to drop legal proceedings against the utility that could have blocked the construction of power lines for the project - considered one of the largest infrastructure works under way in the country.

The final deal will be subject to the approval of the Innu community by referendum in April 2011.

The deal only compensates the Innu of Uashat for the Romaine project. The band still has pending legal proceedings of nearly $2 billion against Hydro-Quebec and the Quebec government for other hydroelectric developments.

Hydro-Quebec has already reached agreements with four other Innu communities affected by the Romaine project.

Court rejects new FERC land use fee formula

A federal appeals court has granted an appeal by nine hydroelectric project licensees who challenged a sharp increase in government land use fees based on a new fee formula by the Federal Energy Regulatory Commission (FERC).

The U.S. Court of Appeals for the District of Columbia Circuit ruled Jan. 4, 2011, that FERC issued the updated land use fees without allowing notice and comments as required by the Administrative Procedures Act. It said the commission also improperly delegated the establishment of reasonable fees to other agencies, the U.S. Forest Service and Bureau of Land Management (BLM). The court vacated FERC's 2009 update of its land use fees.

The court previously blocked imposition of the new fees pending a full hearing on the issues. The licensees include Idaho Falls, Idaho; Tacoma, Wash.; El Dorado (Calif.) Irrigation District; PacifiCorp; Portland General Electric Co.; Chelan County (Wash.) Public Utility District; Puget Sound Energy; Sacramento Municipal Utility District (SMUD); and Turlock (Calif.) Irrigation District.

Previously, FERC followed a 1987 regulation that used a Forest Service-BLM schedule that set fees for linear rights-of-way (for roads, pipelines, and transmission lines) across National Forest System lands. Based on eight zones, "raw" land values were $50 to $1,000 per acre. At that time, FERC concluded the formula was the "best approximation available" and rejected a U.S. Department of Agriculture index in which farm land values were much higher.

In 2008, the Forest Service and BLM modified their fee calculation significantly, using a National Agricultural Statistics Service census of agriculture, which incorporated values of farm lands and buildings. The new schedule established 12 zones with values of $250 to $100,000 per acre. FERC notified hydro operators in 2009 that it would use the new formula, which would cause land use charges "to increase substantially" for many projects.

FERC rejected the licensees' challenge, saying it merely updated its fees based on the Forest Service-BLM changes. On appeal, the D.C. Circuit disagreed. "Because FERC previously approved and used the old Forest methodology, its implicit acceptance of the new methodology in the 2009 Update marked a change in its own regulations. For FERC to make such a change, APA Section 553 required notice-and-comment rulemaking," the court said.

The court also ruled that FERC failed to make a finding, required by the Federal Power Act, that the new fee rules would result in reasonable annual charges that would seek to avoid increasing the price to electric consumers.

The nine licensees, who were represented by law firm Van Ness Feldman of Washington, said their new annual land use charges exceeded $8 million, nearly $5.5 million more than their bills the previous year and an increase of more than 200 percent. They noted there are another 300 licensees, who did not file an appeal, who are subject to increases.

Duke, Progress merger to create largest U.S. utility

The boards of directors of Duke Energy and Progress Energy Inc. unanimously approved a definitive merger agreement to combine the two companies in a stock-for-stock transaction.

The combined company, which will be called Duke Energy, will be the country's largest electric utility, with:

- About $65 billion in enterprise value and $37 billion in market capitalization;

- The country's largest regulated customer base, providing service to about 7.1 million customers in North Carolina, South Carolina, Florida, Indiana, Kentucky, and Ohio;

- About 57 GW of domestic generating capacity from a diversified mix of coal, nuclear, natural gas, oil, hydro and other renewable resources; and

- The largest regulated nuclear fleet in the country.

The companies expect to close the deal by the end of 2011.

FERC staff supports licensing of 1,300-MWpumped-storage project

Federal Energy Regulatory Commission (FERC) staff issued a draft environmental impact statement recommending licensing of the 1,300-MW Eagle Mountain pumped-storage project in Riverside County, Calif.

Eagle Crest Energy Co. applied in 2009 for a license for the project, which is to utilize a head of 1,400 feet between two reservoirs created from abandoned mining pits. It would be a closed system, not linked to a perennial river.

Because the former mining site already has sustained significant environmental disturbance, further development of the site for pumped storage will have little additional environmental impact, Eagle Crest said. The pumped-storage project is to provide energy storage needed to efficiently utilize intermittent renewable energy sources such as wind and solar energy.

"Based on its analysis, staff recommends licensing the project as proposed by Eagle Crest with some staff modifications and additional measures," the draft EIS, issued Dec. 23, said.

The primary environmental issues associated with the project are effects of its construction and operation on groundwater, water quality, and terrestrial species, including several sensitive bat species, desert bighorn sheep, and threatened desert tortoise.

Extension passed for renewable energy incentive 1603

Congress passed a one-year extension of the Department of Treasury Section 1603 program in its tax bill compromise.

The U.S. Tax Grant Program (TGP) known as 1603 was responsible for a large portion of the renewable energy projects built throughout the U.S. in 2010. Originally passed as part of the 2009 stimulus package, TGP was supposed to expire at the end of December.

Trade groups in Washington have been pushing for an extension of the program, which provides a payment of up to 30 percent of equipment costs in place of the Investment Tax Credit.

National Hydropower Association Executive Director Linda Church Ciocci said in a press release: "NHA applauds the House and Senate for approving an extension of the Section 1603 program. Incentives for hydropower and other renewable energy development are critical for our country to expand generation of clean energy resources and promote the local economic benefits and job creation opportunities associated with these projects."

Under the extension, property will qualify if it is placed in service in 2011 or if construction begins before 2012 and the project is placed in service before the applicable credit termination date.

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