Issues and Interests

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PUD News

New FERC approach for setting license terms to maximize value of Rock Island Dam investments

by Kimberlee Craig | Aug 23, 2019
Idea of ‘early’ credit for hydro investments brings new law & favorable federal ruling

Chelan PUD’s leadership role to advocate for new legislation, engage with regulators and move to improve its hydropower operations has produced tangible benefits for its customers and other U.S. power producers.

Federal dam regulators have indicated that Chelan PUD’s significant investments in powerhouse upgrades and spillway safety at Rock Island Dam qualify for “early action credit” toward its next operating license.

The positive ruling is expected to help Chelan PUD take actions earlier that bring value for its customers and ensures the Federal Energy Regulatory Commission (FERC) will consider these significant investments towards a maximum, 50-year term for Rock Island’s new license starting in 2029.

“A longer license term is good for our customer-owners because it will enable Chelan PUD to contribute to decarbonizing the nation’s electric generation resources for many years to come,” said General Manager Steve Wright.

The great news for Chelan PUD customer-owners -- and the hydro industry -- started with an idea more than five years ago: What if investments made before getting a new license were recognized by FERC in determining the next license term?

Project benefits could come sooner, and for longer, than waiting until the next license.

Historically, FERC declined to consider early investments when establishing a new license term. 

With the can-do spirit of public power, Chelan PUD staff kept working with hydro industry partners and lawmakers on the change in federal law that Congress eventually passed last fall establishing credit for early action in relicensing.

Chelan PUD’s Wright credited vital support from Northwest lawmakers for the success in getting the early action credit added to the Federal Power Act.

“The early action credit is just common sense,” said U.S. Sen. Maria Cantwell. “It gives our utilities the flexibility to better plan ahead, benefitting both ratepayers and the environment. Hydropower is critical to Washington’s economy, and I commend Chelan County PUD for its leadership and foresight on this issue.”

U.S. Rep. Cathy McMorris Rodgers also responded: “Washington state is a leader in the production of clean, renewable, and affordable hydropower energy, but for too long, short licenses have put our energy producers at a disadvantage. If we are going to continue to promote and invest in clean energy like hydropower, we need to put it on the same regulatory playing field as other energy resources. I’ve led on streamlining these licensing processes in Congress, and am pleased to see FERC recognizing that work and the work of clean energy leaders in our state like Chelan PUD.”

The Aug. 9 FERC ruling is the first on early action credit under the new law.

Chelan PUD requested early action credit for investments at Rock Island Dam that will total $710 million by 2029, “far beyond the requirements of its 1989 relicensing order,” PUD staff wrote in the application. The measures are:

  • Rebuilding Powerhouse 1 turbines and generators at a cost of $270 million
  • Rebuilding Powerhouse 2 turbines and generators estimated at $352 million
  • Investing $44 million to achieve the Habitat Conservation Plan standard of “no net impact” on salmon and steelhead from dam operations
  • Improving spillway safety with automated gate hoist operations, estimated at $4 million
  • Upgrading office, warehouse and storage facilities to increase efficiency for $40 million

FERC approved more than $600 million of the investments immediately and asked for more information on others before approving the whole package.

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Caption: “Rock Island Dam is on the Columbia River in Washington state.

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