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Hydropower Relicensing is Good Policy by Linda Church Ciocci Seattle Post-Intelligencer, August 5, 2003

The Pacific Northwest's hydropower system has for decades provided many advantages to the residents of the Northwest, including substantial economic advantages. Homeowners have enjoyed electricity rates well below the national average, and inexpensive energy costs have historically helped the region attract jobs.

However, public and private utilities that generate the power driving the Northwest are having to add an increasing factor into power costs -- the cost of relicensing existing facilities. Relicensing -- the process to obtain a new permit from the federal government to operate a hydro facility -- is a process that all parties agree has been broken for years.

In an editorial Wednesday on the U.S. Senate's comprehensive energy legislation, the Post-Intelligencer Editorial Board stated, "the plan would also tilt relicensing of hydroelectric dams in favor of industry-designed environmental provisions." The National Hydropower Association, which counts among its members utilities throughout Washington state, strongly disagrees and believes P-I readers should understand what the recently passed legislation does (and does not) do with regard to hydropower relicensing reform. They should also have some background on how we got to where we are today.

Hydropower relicensing reform is an especially important issue for residents of Washington. More than 74 percent of the Evergreen State's non-federal hydropower capacity (some 18 different projects representing 7,197 megawatts of power) must go through the Federal Energy Regulatory Commission's relicensing process in the next 15 years. The amount of power these projects generate equals the energy needs of about seven cities the size of Seattle!

Since 1986, FERC has been required, under the Federal Power Act, to give "equal consideration" to a variety of factors when issuing hydropower licenses and relicenses. This authority requires FERC to consider the power, economic and development benefits of a particular project, as well as energy conservation and the protection and enhancement of fish and wildlife.

Federal courts, however, have interpreted the Federal Power Act in a way that prevents any effective balancing from taking place. The courts have given federal resource agencies with hydropower jurisdiction (U.S. Department of the Interior, Commerce and Agriculture), and others including state agencies, the authority to set "mandatory" conditions on FERC licenses -- conditions that are automatically made a part of the final license granted to the operating utility.

Why is this a problem? Hydro project owners (and their consumers) are facing higher costs, loss of operational flexibility and lost power generation due to new operating constraints imposed during relicensing that do not effectively balance our energy needs with important environmental goals. A typical hydro project takes approximately eight to 10 years to weave its way through the process, at a cost that can run into the tens of millions of dollars. The contentious process results in uncertainty for the operator and its customers, as well as delays for valuable environmental enhancements.

Here are the facts: The Senate and House bills, passed Thursday and April 11 respectively, allow licensees to propose cost and/or energy-saving alternative license conditions to those proposed by federal resource agencies. Under the bills, the authority of federal agencies to issue mandatory license conditions would remain fully intact. An agency would also have sole authority to determine whether a licensee's alternative satisfies its existing statutory requirements to protect the environment. If an agency determines that those requirements are not met, the alternative would be rejected.

The bills also require agencies to give due consideration to the impacts of their mandatory conditions on the energy, economic, environmental and other public benefits of a hydropower project -- something they are not doing now. This is important as the benefits of hydropower have largely become a lost voice in the licensing process.

The bills -- though this is a fact often overlooked -- do not deny environmental groups, Native American tribes, state agencies or anyone else the right to fully participate in the licensing process as they do today. The licensing process will continue to be the most publicly intensive regulatory process for any energy source in the United States.

Hydropower has long played an important role in our nation's energy and economic strategy and must continue to do so. Our association believes it is possible to have healthy, clean rivers and a viable hydropower industry -- both in the public interest. The legislation reflects this notion and brings responsible reforms to the process. The goal of relicensing reform is to create a process that can effectively address environmental impacts while at the same time recognize and value the many important benefits provided by hydropower projects -- something that rarely occurs as the process today functions.

Relicensing reform legislation is not designed to "tilt" the process in industry's favor. It is an attempt to encourage flexibility and creativity in meeting important resource protection goals while ensuring that our nation's leading emissions-free, domestic, renewable resource is preserved for future generations.

Quite simply, it's good public policy.