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House passes Hydropower Regulatory Efficiency Act

House Resolution 267, also known as the Hydropower Regulatory Efficiency Act of 2013, received a unanimous 422-0 vote of approval before the U.S. House of Representatives Feb. 13.

The legislation is essentially the same as H.R. 5892, which was a bipartisan energy policy designed to promote the growth of mini hydro and in-conduit projects by streamlining the Federal Energy Regulatory Commission permitting process for low-impact proposals.

Specifically, the Hydropower Regulatory Act will increase the small hydro project exemption from 5 MW to 10 MW, remove conduit projects under 5 MW from FERC jurisdiction, increase the conduit exemption to 40 MW, provide FERC the ability to extend preliminary permits, and require FERC to examine a two-year licensing process for non-powered dams and closed-loop pumped storage.

The bill received unanimous approval from the 112th Congress in July 2012, but it did not come to a Senate vote before the end of the session. It was reintroduced by Reps. Diana DeGette, D-Colo., and Cathy McMorris Rodgers, R-Wash., in January and passed the House Energy and Commerce Committee about a week later. The legislation must now pass the Senate and receive presidential approval.

Supreme Court ruling has implications for hydropower

The U.S. Supreme Court has unanimously held that the flow of water from an improved portion of a navigable waterway into an unimproved portion of the same waterway does not qualify as the "discharge of a pollutant" under the Clean Water Act.

The Supreme Court's ruling reverses a decision from the U.S. Court of Appeals for the Ninth Circuit, which said pre-polluted water originating from a navigable river and passing through a "man-made construction" into the natural river downstream is a "discharge of a pollutant" as per the CWA.

Los Angeles Flood Control District v. Natural Resources Defense Council, Inc. originated when the Natural Resources Defense Council (NRDC) filed a suit against the Los Angeles County Flood Control District under CWA Section 505, alleging that the number of pollutants carried by the district's "municipal separate storm sewer system" (MS4) violated its National Pollutant Discharge Elimination System (NPDES) permit.

The court granted a summary judgment to the district in part because the record did not show that the district's storm water system was responsible for discharging the standard-exceeding pollutants. That ruling was subsequently reversed by the Ninth Circuit, which argued the pollutants were detected at monitoring stations located in the district's "man-made constructions," thus making the district liable for its discharge from MS4. According to the Ninth Circuit, CWA "does not distinguish between those who convey what is added by others," meaning the act is "indifferent to the originator of water pollution."

The Ninth Circuit's ruling was overturned by the Supreme Court, which argued that South Florida Water Management District v. Miccosukee Tribe had already established precedent for such disputes. As in the Miccosukee case, the Supreme Court defined the "discharge of a pollutant" to mean the "addition" of a pollutant, meaning discharges occur under CWA only if water is transferred between "meaningfully distinct water bodies."

"If one takes a ladle of soup from a pot, lifts it above the pot, and pours it back into the pot, one has not 'added' soup or anything else to the pot," said the Supreme Court in an opinion delivered by Justice Ruth Bader Ginsburg earlier this week.

Hydro industry benefitting from fiscal cliff deal

America's hydroelectric industry received a late Christmas present when the U.S. Congress passed a one-year extension of renewable energy tax incentives.

The production tax credits, which equate to 1.1 cents/kWh for qualified hydroelectric projects, were extended as part of a deal to avoid the "fiscal cliff" and also extend to the wind, geothermal, biomass and waste-to-energy industries.

Leaders in renewable energy fields had originally asked Congress to consider extending the production tax credit through 2016, saying it was essential for continued development.

"Developers and investors now have the certainty necessary to pursue projects that might not otherwise have gone forward, creating jobs and expanding hydropower production across the country," said NHA Executive Director Linda Church Ciocci.

FERC issues final rules revising land use fees

The Federal Energy Regulatory Commission has issued a final rule revising its formula for calculating government land use fees for FERC-licensed hydroelectric projects.

FERC's new rule, issued Jan. 17, says the changes will increase the amount collected in annual rents by less than 1%, although some licensees will experience higher rates and some lower, depending on the circumstances where a project is located.

Based on comments responding to its original November 2011 notice of proposed rulemaking, FERC made several changes in the final rule, including agreeing to phase in the increase, with a 25% reduction in the new annual charge in the first year.

The U.S. Court of Appeals for the District of Columbia Circuit had overturned FERC's 2009 update of its land use fees. The court ruled in 2011 that FERC imposed updated - and significantly higher - land use fees without allowing notice and comments as required by the Administrative Procedures Act. The court said the commission also improperly delegated establishment of reasonable fees to other agencies, the U.S. Forest Service and Bureau of Land Management.

In response, the commission called for suggestions how to create an administratively practical formula that applies uniformly to all hydropower licensees, does not impose exorbitant costs on the commission, and reflects reasonably accurate land values. After comments from licensees, industry trade groups, and federal agencies, FERC issued the 2011 notice of proposed rulemaking that was the basis for the final rule issued Jan. 17.

BLM formula changed to use per-county land values

FERC returned to a formula drafted by BLM for calculating annual fees, based on a National Agricultural Statistics Service census of agriculture, which incorporates values of farm lands and buildings. However, FERC said it would utilize actual per-county land values, rather than grouping the counties in 12 BLM zones that tended to inflate the values.

The commission noted the new fee schedule, to be updated annually, is based on a formula with the following components: a per-acre land value by county (or geographic area in Alaska and Puerto Rico); an "encumbrance factor;" a 5.27% rate of return that coverts the land value to a rental value; and an annual inflation adjustment. The encumbrance factor multiplies the land value by 50%, reflecting the degree to which project facilities hinder other uses.

It also reduced land values 20% from the NASS census to reflect the presence of irrigated land or buildings and other improvements that otherwise increase the average land values.

Charges imposed on 253 licenses on federal land

FERC said it assesses annual charges for federal land use by 253 licenses held by 135 licensees. It said some of the licensees might experience a one-time increase in their annual land use charge. "We recognize that for some licensees the annual charge for use of government lands will increase, but this is because annual charges have not been updated to reflect changes in land values since 1987," FERC said.

The commission added that increases charged to Alaska projects might seem significant due in large part to an arbitrarily low rate assessed in Alaska. In November, eight hydro licensees with projects in Alaska and three other states petitioned FERC, challenging fees for land the federal government no longer owns. The challenge relates to those situations in which the federal government transferred some hydro project lands to the licensee or another owner but retained a power site reservation.

The land use fee final rule, Order 744, may be obtained at www.ferc.gov/whats-new/comm-meet/2013/011713/H-1.pdf.

Salazar announces plan to leave government agency

U.S. Secretary of the Interior Ken Salazar has announced he will leave the government agency by the end of March, having fulfilled his four-year commitment to President Barack Obama.

Salazar, who accepted the position after having served as Colorado Attorney General and a U.S. Senator for 14 years, said the decision was fueled by personal reasons. "Colorado is and will always be my home," Salazar said. "I look forward to returning to my family and Colorado after eight years in Washington, D.C."

Since being selected as Secretary of the Interior in October 2008, Salazar has played a strong role in helping shape the President's "all-of-the-above" energy plan, which includes both hydroelectric and conventional energies. Since 2009, the agency has authorized more than 30 wind, geothermal, solar and hydro projects on public lands with a combined capacity of 10.4 GW.

President Obama has not yet named Salazar's successor.

FERC upholds order restricting BPA wind curtailment in favor of hydro

The Federal Energy Regulatory Commission has upheld its ruling that Bonneville Power Administration must restrict its practice of curtailing wind generators to make room on the grid for excess federal hydropower resulting from high river flows.

In rulings Dec. 20, FERC conditionally accepted BPA's Oversupply Management Protocol under which BPA will partially compensate wind generators if it curtails their generation. FERC also ordered BPA to submit an additional compliance filing that allocates curtailment costs so non-federal generators receive comparable transmission service to that which BPA provides.

FERC ruled in December 2011 that the federal transmission operator must stop curtailing wind generators without compensation for lost production tax credits, renewable energy credits and revenue from power purchase agreements.

BPA began limiting the output of non-hydroelectric energy in May 2011. The wind generators, who have no fuel costs, filed a complaint with FERC in June 2011 urging it to stop BPA from using its transmission monopoly power to curtail competing generators in an "unduly discriminatory manner."

The agency said it acted to protect salmon and steelhead from high dissolved gas concentrations in spilled water and maintain the reliability of the power grid.

Under its new protocol, BPA first would work with the U.S. Army Corps of Engineers and Bureau of Reclamation to manage federal hydro generation and spill water up to dissolved gas limits. BPA then would offer low-cost or free hydropower to replace other output, with the expectation that many plant owners would voluntarily reduce generation to save fuel costs.

If hydro supply still exceeds demand, BPA would reduce the output of remaining generation in order of least cost and compensate for lost revenues.


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