Congress has reconvened for a lame duck session – that’s the short period of time between elections and the swearing in of a new Congress and President. Potentially on the agenda before year’s end is an issue we have been pushing that could provide value for all Chelan PUD ratepayers. It has to do with hydropower relicensing and is contained in the pending comprehensive energy bill. Let me explain.
Because hydropower projects use public waterways, we need a license from the federal government to operate. It can take ten years – or more – to get approval from the Federal Energy Regulatory Commission (FERC) for a new hydro license. The Rock Island Dam license expires in 2028. We already are making plans to prepare for a new license.
Congress may soon consider a proposal that would make re-licensing more fair. It’s called “early action credit.” It means that Chelan PUD, as a licensee, could get credit for improvements we make at Rock Island before the current license expires.
Right now, a hydropower license can be anywhere from 30 – 50 years in length. FERC decides how long a license will be based on a number of things, including how much money will be invested in the hydro project. If a project is getting its second or third license, FERC doesn’t consider new investments made during the current license when setting the next license term – even if those investments will carry over into the new term. As a result, hydro operators are incented to defer costly (and needed) economic and environmental improvements until after a new license is issued. This is not good public policy given the enormous value of hydropower.
We saw this happen at Rocky Reach when our investments weren’t considered during the renewal process. Although the PUD invested $107 million in 2004 to construct a juvenile fish bypass system at the dam to safely move young fish downstream, FERC didn’t give us credit for that action when a new 43-year license was issued in 2009.
We now face the same situation. Already, the PUD is prepared to make extensive modernization investments at Rock Island – involving hundreds of millions of dollars that will ensure this dam keeps providing value to customer-owners. However, as of today, we wouldn’t get credit for those investments when our license comes up for renewal. Those investments would replace turbines and generators that will extend the operational life of this valuable revenue-producing asset, increase the reliability of the units and modernize the equipment to reduce potential environmental – and fish – impacts. In addition, Chelan PUD may consider some additional environmental enhancements for fish species such as bull trout, lamprey and sturgeon, and even recreational improvements.
Starting last year, we worked to initiate a proposal to fix this problem. The good news is that the energy legislation pending in Congress would give us credit for work at Rock Island and any other investments made in advance of getting a new license. Senator Maria Cantwell has championed this provision in the Senate version of the energy bill that would require FERC to consider these early investments. In the House, Rep. Cathy McMorris Rodgers has actively supported including early action in a final energy bill. The idea of receiving credit in a license term for early action is now supported by utilities across the country, and the National Hydropower Association has made this a high priority.
Your Chelan PUD may be a small-town utility, but we are deeply affected by national legislation. Join us in letting Congress know how vital this legislation is. Protect your investments in clean, carbon-free, low-cost, and reliable hydropower.