Public Power Weighs In On Hydropower Licensing Issues At House Hearing

May 19, 2022

by Paul Ciampoli
APPA News Director
May 19, 2022

Rich Wallen, General Manager and CEO of Washington State’s Grant County PUD, recently warned of the negative consequences that could result from the removal of the Lower Snake River Dams in testimony he gave at a House hearing that examined proposed hydropower licensing changes.

Meanwhile, the American Public Power Association (APPA) said in a statement for the record for the hearing that the process for licensing non-federal hydro projects must be streamlined and reformed.

The hearing was held on May 12 by the House Energy and Commerce Committee’s Subcommittee on Energy.

Along with Wallen, other hearing participants were Malcolm Woolf, President & CEO, National Hydropower Association, Tom Kiernan, CEO, American Rivers, Mary Pavel, Partner, Sonosky, Chambers, Sachse, Endreson & Perry LLC, and Chris Wood, President & CEO, Trout Unlimited.

The primary focus of the hearing was to examine hydropower licensing and proposed changes recently put forth by groups involved in the “Uncommon Dialogue” effort, a forum created by the Stanford Woods Institute to bring together stakeholders to develop consensus policy, technology, and investment recommendations related to hydropower, river health, and dam safety.

Grant County PUD owns and operates two Columbia River dams and two smaller hydro generators that have a combined generating capacity of more than 2,100 megawatts. Priest Rapids and Wanapum dams, collectively known as the Priest Rapids Project, are licensed by the Federal Energy Regulatory Commission (FERC).

In his testimony, Wallen noted that the PUD supports H.R. 1588, the Hydropower Clean Energy Future Act, sponsored by Rep. Cathy McMorris Rogers, R-Wash.

The recently completed Columbia River System Operation Environmental Impact Statement studied the environmental, biological, power supply and socioeconomic impacts of the entire Federal Columbia Rivers System Operations. 

While one of the proposed alternatives was breeching the Lower Snake River Dams, the conclusion of the study was that the dams play a vital role in the Northwest power system and that their continued operation does not inhibit the existence of endangered or threatened salmon species.

“While we recognize some of the removal efforts contemplated under the Uncommon Dialogue are for non-powered dams, the predominance of dam removal in the dialogue at all is concerning,” Wallen told lawmakers at the hearing.

He pointed out that the Lower Snake River Dams were built to facilitate fish passage and actually achieve spring juvenile survival rates at 96% and summer migrating fish survival at 93%, meeting or exceeding performance standards. 

“Nonetheless, some stakeholders push for removal of the Lower Snake River Dams even though the fish in the neighboring undammed rivers are experiencing similar stresses and the fact that only three of the listed species even migrate up the Snake,” Wallen said.

The four Lower Snake River Dams are a critically vital component of the Bonneville Power Administration’s (BPA) low cost, carbon-free power supply, he went on to say.

“To remove the dams would result in massive rate increases to regional supply costs, increases in carbon emissions and increased risk of blackouts,” he said. “Replacement carbon-free resources are not available and cannot be easily or cheaply secured and require overbuild to counteract their intermittency.”

Under this future, the Lower Snake River Dams “will grow in importance, because they can act as giant, clean energy batteries, helping fill in these gaps for wind and solar.”

Wallen said that hydropower “provides dependable and carbon-free generation, when we need it and how we need it.”

While Grant PUD owns and operates its own hydropower dams, “we are concerned about the impact losing the Lower Snake would have for the entire region.”

He noted that the Western Electric Coordinating Council in its 2021 Western Assessment of Resource Adequacy issued a warning that every region comprising the Western grid is facing an abnormal risk of blackouts.

“We are also concerned about the price impacts, as the BPA has forecasted wholesale price impacts of 50% if the dams are removed and replaced with wind or solar plus batteries,” Wallen said. “This price hike could impact Grant PUD customers,” he said, noting that the PUD has priority rights to BPA-provided generation.

“In a carbon-constrained world, hydropower is increasingly vital for its emissions-free generation, load-following capabilities, grid stability and integrating intermittent resources that keep the lights on,” Wallen said.

APPA Statement For the Record

In its Statement for the Record, APPA noted that there is a significant potential for new hydropower to be generated at non-powered dams throughout the country and to increase output at existing hydropower facilities. “But there are excessive barriers to tapping this potential,” it said.

The Federal Energy Regulatory Commission (FERC) is the primary federal agency responsible for the licensing and relicensing of such non-federal hydroelectric projects, “but the process can be lengthy, difficult, costly, and uncertain for applicants,” APPA said.

It noted that under the Federal Power Act (FPA), FERC must establish requirements in conjunction with the license that give “equal consideration” to not only power needs, but also Endangered Species Act requirements, water quality issues, marine navigation, and other public-interest concerns. FERC must carefully evaluate many aspects of a hydropower project, but at the same time, state and federal agencies can impose “mandatory conditions” that FERC cannot balance or modify in the public interest.

“While it is appropriate to consider a broad array of factors, this process must be streamlined and reformed. Critical new additions to existing hydropower facilities are languishing under bureaucratic and often contradictory processes that can span a decade or more or which simply become too costly,” APPA said. “The byzantine licensing and permitting processes are also a significant impediment to simply maintaining existing hydropower capacity.”

Between now and 2030, 281 facilities representing nearly 14 gigawatts of hydropower generation and pumped storage capacity — roughly 30 percent of FERC hydropower licenses — are up for relicensing.

“We simply cannot afford to lose existing hydropower capacity without threatening to miss emission reduction goals and grid resiliency. Congress must streamline the licensing process by establishing FERC as the lead agency, giving it the authority to set and enforce schedules for the issuance of all resource agency authorizations and studies, and ensure any “mandatory conditions” are directly relevant to the project,” APPA argued.

Federal Tax Incentives

APPA said that another significant obstacle to the growth and retention of non-federal hydropower capacity is insufficient federal tax incentives on par with those available to other clean energy resources.

APPA noted that it strongly supports legislation introduced by Senators Maria Cantwell (D-WA) and Lisa Murkowski (R-AK), the Maintaining and Enhancing Hydroelectric and River Restoration Act of 2021 (S. 2306), that seeks to address this issue.

The bill would create a 30 percent tax credit to support upgrades at existing hydroelectric dams for qualified dam safety, environmental, and grid resilience improvements. “Critically, this credit would be available as a direct payment to public power utilities,” APPA said.

This provision is also included in a bill introduced by Representative Annie Kuster (D-NH), H.R. 4375, the Twenty-First Century Dams Act.

“It is critical that this provision be included in any energy tax credit legislation that may be considered this Congress,” the public power trade group said.

“Uncommon Dialogue” Effort

While APPA was not directly involved with the “Uncommon Dialogue” effort lead by the National Hydropower Association and a number of environmental and tribal organizations, it noted that many of APPA’s members are also members of the National Hydropower Association and were engaged as the proposal developed.

While APPA continues to believe that the hydropower licensing process requires more comprehensive reform along the lines of what was included in H.R. 3043 in 2017, “we appreciate the incremental changes included in the group’s recently (April 2022) released licensing reform proposals. We are particularly supportive of the proposed requirement that mandatory conditions under section 4(e) of the FPA be reasonably related to project effects on federal lands.” 

 With respect to other proposals put forth in by the Uncommon Dialogue group and associated legislation regarding dam removal, APPA said it opposes efforts to remove productive dams that provide, or have the potential to provide, clean and economic hydropower generation.

“Furthermore, proposals to appropriate funding for the Corps, Reclamation, and any other federal agencies for ‘dam related activities’ must include statutory text specifying that this funding cannot be incorporated into the rates paid by federal hydropower customers,” it said.

Federal Hydropower

APPA also said that federal hydropower and the Power Marketing Administrations are critical, though often overlooked, elements of the nation’s power supply.

APPA supports the continued existence and federal ownership of the PMAs and the sale of federally generated hydropower at cost-based rates and “strongly opposes any efforts to disproportionately assign costs to federal hydropower users for which they receive no additional benefits.”

National Hydropower Association

In his testimony at the hearing, the National Hydropower Association’s Woolf said that new and existing hydropower “is at risk due in part to the byzantine licensing and relicensing system.”

He said that the country is at the crest of a wave of hydropower licensing. “At the same time, relicensing takes 7.6 years to complete on average and often takes much longer than a decade.”

A recent industry survey found than more than 40 percent of hydropower industry asset owners said that they were actively considering decommissioning a facility, Woolf noted. “Alarmingly, 58 percent of facilities have submitted license surrender applications to FERC since 2010 including 17 in just the last two years.”

Reform of the hydro licensing process is urgently needed, he said, noting that the National Hydropower Association supports the joint license reform package.

A summary of the proposed changes, as well as the proposed changes to the text of the Federal Power Act (FPA) itself, are available here.

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