FERC Commissioners Comment on Hydro

The five commissioners of the Federal Energy Regulatory Commission share their thoughts about hydropower’s opportunities and challenges, as well as their specific hydro-related plans and priorities.

Hydro Review asked the commissioners of the Federal Energy Regulatory Commission to share their thoughts about the challenges and opportunities for hydropower, as well as their plans for hydro.

The Federal Energy Regulatory Commission (FERC) is composed of five members appointed by the president of the United States and confirmed by the U.S. Senate. No more than three members may belong to the same political party.

Commissioners are:

    – Chairman Joseph T. Kelliher, a Washington, D.C., Republican, confirmed by the Senate in November 2003 and appointed chairman by President Bush in June 2005. After his term expired in June 2007, President Bush nominated him to serve an additional five-year term. Kelliher currently still serves as chairman while the nomination is pending before the Senate. If confirmed for a second term, he will serve until June 30, 2012.
    – Suedeen Kelly, a Democrat from New Mexico, has served since November 2003, and was confirmed by the Senate for a second term in December 2004. Her term expires in June 2009;
    – Philip D. Moeller, a Washington State Republican, sworn in by Chief Justice John Roberts in July 2006. His term expires in June 2010;
    – Marc Spitzer, a Republican from Arizona, confirmed by the Senate in July 2006 for a term expiring in June 2011; and
    – Jon Wellinghoff, a Nevada independent, sworn in July 2006 for a term expiring in June 2008.

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Joseph T. Kelliher,
Chairman, Federal Energy Regulatory Commission

Hydropower is an essential part of the U.S.’s electricity supply. New hydropower technologies that utilize ocean waves, tides, and currents from free-flowing rivers hold significant potential, and may allow hydropower to play an even larger role in meeting the electricity supply needs of the U.S. and other countries. In effect, the new hydropower technologies may represent the last frontier for a major expansion of U.S. hydropower capacity.

These new technologies have the potential to provide a significant share of U.S. electricity supply. There are some significant challenges that must be overcome before that potential can be realized, however. These technologies have not been deployed commercially and their commercial viability has yet to be proved. There are also environmental, financial, and regulatory challenges.

The environmental issues are complicated by the fact that there is little scientific evidence on the effects of these new technologies. That stands in stark contrast with the conventional hydropower technologies, which have operated for more than 100 years. It is much easier to forecast the environmental effects of an existing conventional hydropower project based on hard evidence of its operating history than to project the environmental effects of technologies with no operating history. There will be environmental effects from these technologies. Those effects must be carefully considered and mitigated.

There are financial challenges as well. These new technologies are either at the research and development stage or just starting demonstration. Financing is required to complete development and demonstrate the technologies. Then there is the cost of commercial deployment. Financing challenges and regulatory challenges are related. If the regulatory process is unable to accommodate these new technologies, it is unlikely financing for commercial deployment will be secured. If the regulatory process is uncertain or unproven, it may frustrate the potential of these technologies. In my view, an unpredictable process may present the greatest regulatory risks.

The FERC regulatory process is well established and well suited to handle the development of these new technologies. FERC has made adjustments as necessary to our regulatory processes to help realize the potential of new hydropower technologies.

Over the years, we have improved our licensing process to include early engagement between the project sponsor and stakeholders, earlier and more predictable study requirements, more certain timeframes, and overall reduced processing time. This approach is critical to ensure careful review of these new technologies.

FERC is working to ensure that laws written early in the twentieth century meet the needs of the new technologies of the twenty-first century. We have sufficient flexibility under the law to meet the challenges of these new technologies. For example, we used different license processes for the 1-MW Makah Bay ocean project off the coast of Oregon and the 10-MW Roosevelt Island project in the East River of New York City. We developed a new pilot project license designed to authorize technology demonstrations.

FERC is doing its part to help the new technologies prove their potential. Our regulatory process is sound, and we have demonstrated our flexibility.

In 2007 alone, FERC issued 35 preliminary permits for new hydropower technologies, 30 for current energy projects, four for ocean wave energy projects, and one for a tidal energy project. It is my hope these new technologies will overcome the remaining challenges that lay before them.

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Suedeen Kelly,
Commissioner, Federal Energy Regulatory Commission

Although I come from New Mexico, a state not normally associated with hydroelectric power, I am a long-time believer in the many benefits hydroelectric power offers. It is immune to price increases for fossil fuels; it can provide outstanding recreational opportunities; and it is reliable. Hydroelectric power provides significant generation, peaking capacity, and ancillary services to bolster the reliability of the U.S.’s transmission system, and hydroelectric units are able to start, stop, and change output quickly. It has been said many times, but bears repeating: there is no better example of hydropower’s critical role in maintaining electric grid stability than its important role in bringing the electric grid back on line following the August 2003 blackout.

Perhaps most important, hydropower is clean and carbon-neutral. As the United States – indeed the world – faces the major environmental concern of climate change, we need to find ways to reduce carbon emissions while meeting our growing energy demands. Although hydropower’s benefits in meeting our energy needs are well known, I believe the commission should be loud and clear in voicing the lesser-known benefit of low-emissions energy that can be derived from hydropower to reduce the effects of climate change. By way of example, according to the Pew Center on Global Climate Change, Brazil generates over 90 percent of its electricity by capturing the energy in falling water. Per capita carbon emissions in Brazil are less than half the world average, largely because of the country’s heavy reliance on hydropower.

In the U.S., approximately 10 percent of all electricity generated comes from hydroelectric projects. The commission regulates more than 1,600 hydroelectric projects at about 2,500 dams pursuant to Part I of the Federal Power Act. These projects generate about 57,000 MW of hydroelectric power, which represents half of that 10 percent total.

One exciting emerging area of growth for additional hydropower sources is “new technologies,” which the commission generally defines as mechanisms to produce hydropower from ocean currents, tides, wave action, and in-river projects, without the use of a dam. Indeed, new technologies could add a substantial amount of capacity in the U.S. A recent Electric Power Research Institute (EPRI) study estimates the potential for wave and current power in U.S. oceans to be over 350 billion kilowatt-hours per year, which would equal the output of traditional hydropower in its most productive years. Put another way, ocean-based hydropower using new technologies could potentially double hydropower production of the current national total.

In the past, efficient and reliable conversion of kinetic energy from water has proven difficult, but with recent advances in technology, rising fuel costs, and a growing demand for clean energy, the potential for the use of new hydropower technologies is growing. Indeed, in the last couple years, new hydropower technologies have gained significant momentum, and captured the time and attention of this commission.

While there is no doubt that ocean currents, tides, wave action, and in-river projects have numerous potential benefits, the technology is new, and the potential environmental and safety concerns of such projects, as well as their feasibility, are not fully understood. Nevertheless, we have seen a surge in applications for preliminary permits for the new technologies. Prior to 2004, we received no applications for projects using ocean technologies. Just three short years later, we have issued 46 permits, including 41 for proposed current energy projects, four for proposed ocean wave energy projects, and one for a proposed tidal energy project. More than 30 additional preliminary permits are pending.

In recognition of the extraordinary interest in this promising technology, in October 2007, the commission held a technical conference to hear stakeholder comments on a staff proposal for a streamlined pilot license process for proposed hydrokinetic projects that are 5 MW or less, which would receive license terms of approximately five years. This pilot process would reduce barriers to new hydrokinetic energy projects, while ensuring environmental effects are monitored and assessed.

I believe a hallmark of this commission is its commitment to meeting the ever-evolving challenges and opportunities facing the hydroelectric licensing and compliance process. Our careful consideration in addressing new technologies is but another example of that commitment. It is critical that we continue to work closely with stakeholders in the hydropower industry, as well as policy-makers and other regulators, to encourage the development of new technologies to foster clean, reliable energy.

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Philip D. Moeller,
Commissioner, Federal Energy Regulatory Commission

Hydro is back! Call it what you want: “cool,” “suave,” “sophisticated” or “sexy,” but hydropower is fashionable in the energy world again, whether the paparazzi know it yet or not.

Of course hydropower never went away, as it has remained largely a safe, reliable, economical, and renewable source of energy in almost all regions of the U.S. It provides nearly 10 percent of the electricity consumed in the nation and emits no carbon. Sometimes taken for granted, hydropower is often noticed only by the general public on those rare occasions when it is not available. But this industry is on the verge of some exciting changes, and you know what they say: get behind the wave before it gets behind you!

As someone who was raised in Washington State – clearly “hydro country” – I have long been very familiar with the multiple benefits of a river system. Fish and wildlife habitats, recreational opportunities, and hydropower potential are known to most citizens. Less obvious – depending on the project – are the potential benefits of flood control, drinking water, irrigation, and navigation.

In my role as a commissioner, I have endeavored to raise the profile of hydropower at the commission. During my term, I am hopeful that we can hold regular conferences not only on the existing state of regulation of traditional hydropower but also on the development of new hydropower technologies.

This new generation of hydropower technologies offers amazing potential for abundant supplies of domestic renewable power generation, and for educating energy consumers on the existing environmental and economic benefits of this source of electricity. Regardless of whether it is tidal power, ocean current power, in-stream hydropower, or other creative designs that harness energy from water, the opportunities for expanding this renewable resource appear limitless. This is what captures people’s imagination.

Although widespread development of these resources is still a few years away, the actual work of studying and analyzing the technologies and sites is happening now. The public’s fascination with new technologies is clear based on the extensive amount of their coverage in the “mainstream” media.

This widespread interest in the new technologies – and the near obsession with public policy related to carbon emissions – provides a rare opportunity for the hydropower industry to further educate the public on the existing benefits of this industry. It is all about balancing multiple interests – something the industry and the regulators have been doing for decades. I hope the industry will seize this opportunity to educate current and future consumers.

One of my priorities is to support policies that avoid delays in the development of new hydropower technologies. Recognizing the need to get the process right and the continuing need to balance various interests, I remain somewhat impatient about the time it could take to capture this resource. I will strive to assure that the commission continues to send strong and coherent signals to potential developers of the resource.

Every source of energy – including hydropower – will continue to have benefits and challenges that need to be balanced. But the hydropower industry is in a unique period where its contribution to the U.S.’s infrastructure is about to have a higher profile. And that is good for everyone, paparazzi included.

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Marc Spitzer,
Commissioner, Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission regulates more than 1,600 hydroelectric projects at about 2,500 dams pursuant to Part I of the Federal Power Act (FPA). Since 2000, the commission has issued more than 220 new licenses (relicenses). Together, these projects represent 57,000 MW of hydroelectric capacity and over 5 percent of all electric generating capacity in the U.S. I believe that hydropower is an essential part of the U.S.’s energy mix, is essential to the reliability of the electric grid, and supports competitive electric markets by providing low-cost energy reserves and ancillary services.

Just like any other seller of power that the commission regulates, licensees must comply with the FPA, the commission’s orders, and regulations. Section 31 of the FPA authorizes the commission to monitor and to investigate such compliance and to assess civil penalties for violations. A few months after beginning my tenure at the commission, we issued an order approving a settlement agreement with AmerenUE. Under the settlement, AmerenUE paid a total of $15 million arising from violations at its Taum Sauk Hydroelectric Project and agreed to implement a program to improve the safety and compliance plans at all of its hydroelectric facilities.

The Taum Sauk episode demonstrates the commission’s ongoing efforts to investigate and remedy dam safety and license compliance matters. Our focus, however, should be on compliance, not after-the-fact penalties. Indeed, the commission has established a number of programs designed to prevent another Taum Sauk-like situation.

For example, the commission’s Office of Energy Projects has initiated a program where it meets with licensees soon after license issuance to reach an understanding of the requirements under each license condition. I find this particularly useful because the commission can best facilitate compliance where there is clarity as to the requirements of a license condition. I encourage licensees to establish a robust compliance tracking system for their projects and to communicate with, and to seek advice from, our hydropower compliance group on post-licensing matters. Similarly, the commission’s dam safety group has developed a number of programs through a collaborative effort with licensees, engineering consultants, professional associations, and other interested stakeholders that are designed to develop meaningful dialogue, to provide a better understanding of the safety requirements of the dams and structures, to identify risk profiles, and to develop solutions. I encourage licensees to take advantage of these programs.

The commission also recently issued its Policy Statement on Hydropower Licensing Settlements to provide all hydropower stakeholders with notice of certain principles regarding settlements. The Policy Statement is designed to facilitate settlements that include proposed license conditions that are clear, enforceable, and supported by substantial evidence. The Policy Statement also requires settling parties to demonstrate that there is a nexus between a proposed license condition and the project effects and purposes.

I believe that the Policy Statement clarifies commission policy and facilitates communication between hydroelectric stakeholders and the commission. In sum, we at the commission are committed to identifying opportunities to work with stakeholders to improve the regulatory mission of facilitating effective compliance. Such actions will ensure hydroelectric power remains an essential part of our nation’s energy supply.

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Jon Wellinghoff,
Commissioner, Federal Energy Regulatory Commission

Hydropower already makes a vital contribution to meeting the U.S.’s energy needs, providing approximately 78,000 MW of electrical generating capacity. To address the U.S.’s serious energy challenges, however, we must ensure that we are both making the most efficient use of our existing hydropower resources and promoting smart investment in new hydropower resources and innovative technologies.

Advanced technology offers great potential for making more efficient use of our existing hydropower resources. In 2005, the U.S. Climate Change Technology Program estimated that retrofitting advanced technologies and optimizing system operations at existing hydropower facilities would produce at least a 6 percent increase (about 5,000 MW) in capacity. These efficiency gains would complement the distinctive operational and environmental attributes of many hydropower facilities.

Recent studies also indicate great potential benefits from smart investment in small hydropower projects. In a 2006 report to the U.S. Department of Energy, the Idaho National Laboratory identified more than 5,000 sites across the country that could be developed as small hydropower projects with a total hydropower potential of approximately 18,000 MW. The development of such distributed resources would not only provide new capacity, but also enhance reliability.

Another area that warrants exploration involves innovative technologies that produce electric power using currents and wave action. Such technologies have the potential to create opportunities beyond the traditional hydropower model that relies on dams or other diversion structures. While these technologies are in their infancy, with proponents primarily exploring the feasibility of possible projects, some estimates suggest that the potential for wave and current power could be over 350 terawatt-hours per year, or enough to meet nearly 10 percent of national demand. One particularly positive attribute of this new, renewable source of hydropower is that many of the most promising resource areas are in offshore locations close to large population (and thus load) centers. Such locations mean that these technologies could reduce congestion on our transmission system.

I look forward to building on the Federal Energy Regulatory Commission’s efforts to date and promoting further development in each of these areas. For example, the commission recognizes that the perception of a long and complex licensing process may discourage people from pursuing their interests in developing small hydropower projects. To address that concern, the commission’s staff has sought to shorten and simplify the licensing process where possible and has recommended waiving certain aspects of the process in appropriate circumstances, such as where an applicant has chosen a site that minimizes environmental effects and has built a consensus among stakeholders regarding project issues. By increasing awareness of these steps that can expedite the licensing process, the commission can remove a significant obstacle to development of small hydro projects.

Similarly, the commission is taking steps to promote the development of innovative hydropower technologies. In October 2007, I was pleased to join Commissioner Phil Moeller at a conference in Portland, Oregon, on hydrokinetics. Building on that conference, the commission is examining regulatory requirements that may present unnecessary barriers to development of this technology.

The commission should and will continue to look for ways to promote efficient use of existing hydropower resources and smart investment in new hydropower resources and innovative technologies.

Each preceding article contains the individual views of the commissioner authoring it. The articles do not represent the views of the United States or the Federal Energy Regulatory Commission.

Reducing Regulatory Barriers for New Technologies

To reduce barriers to the success of new hydrokinetic energy projects, the staff of the Federal Energy Regulatory Commission proposes a new five-year pilot license that could be completed in as few as six months.

Commenting on the proposed license, FERC Chairman Joseph T. Kelliher said, “This proposal represents a major step to reduce the barriers to the success of these new hydro technologies, by proposing a simplified licensing process suitable for licensing pilot projects.”

Commissioner Philip Moeller agreed. “This new generation of hydrokinetic technologies will bring hydropower to the forefront of the renewable energy debate,” he said. “It is generating a lot of enthusiasm throughout the country, particularly in coastal states.”

The commission convened a technical conference in Portland, Oregon, Oct. 2, 2007, to allow stakeholders to comment on the proposal. The conference, led by Moeller, was the latest in a series of measures the commission has undertaken since 2006 to address intensifying interest in the development of hydrokinetic technologies.

During the October conference, Moeller told participants: “I look forward to working with my fellow commissioners, commission staff, states, federal agencies, tribes, and stakeholders on the current effort with the hope that new hydropower technologies will be commercially feasible and successfully developed where appropriate to generate renewable power.”

The goal of the staff proposal is to complete the full licensing process in as few as six months, provide for commission oversight and input from affected states and other federal agencies, and allow developers to generate electricity while conducting the requisite testing.

The process would be available for projects that are 5 MW or smaller, removable or able to shut down on relatively short notice, located in waters that have no sensitive designations, and are being developed for the purpose of testing new hydro technologies or determining appropriate sites for ocean, wave, and tidal energy projects as well as inland hydrokinetic projects.

FERC continues to collect feedback on the license proposal. Written comments were due Nov. 2, 2007.

– By Celeste Miller, FERC

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