Collaborative relicensing: can it work?

Fisheries biologists who work for hydro companies are a bit like presidential press secretaries. On the one hand they are there to meet the needs of the media. On the other, they work for the president, who may not always support openness with the people who scrutinise him so closely. In the same way, the interests of the fish I’ve spent my professional life promoting are frequently at odds with those of the megawatts of my employer. My challenge, as the relicensing manager for the two Avista hydroelectric projects on the Clark Fork river of Western Montana and Northern Idaho, was to find a way of meeting the needs of both fish and power generation.

As an added complication, changes in the power generation industry have created a new business paradigm. Under traditional relicensing regulations, hydro operators had, arguably, little incentive to reach an agreement. Many relicensing projects, such as the Cushman project (see p26) have run on for years. But profound changes in the regulated energy market means taking a second look at lengthy relicensing.

If hydro utilities are caught unprepared, tied up with endless challenges and proceedings, they stand to loose important business opportunities. While they’re busy meeting with lawyers, their competitors will pursue their customers, create new products and services, or just generally do a better job of running their business. The advent of competition in the power generation business means cutting back on the paperwork so that you can keep your eye on the rapidly changing horizon.

For Avista, that meant trying something different. Rather than fight it out in court, we courted environmentalists, Indian tribes, community groups and agencies with a stake in the Clark Fork projects. We asked representatives of all these groups to join us in a process that would lead to a settlement before we filed our application for a new licence — one that would assure profitable operation of the projects and meet the needs of fisheries, wildlife, and recreational resources.

Central to this collaborative process is the concept of a Living Licence. Traditionally, licences issued by the Federal Energy Regulatory Commission (FERC) had fixed conditions that were often static over the 40- or 50-year life of the licence. This meant that tribes, environmentalists and recreational groups saw relicensing as their one chance to influence river management. And what has made this effort so difficult is they had to predict today what may or may not be needed, to protect their interests over the entire life of the new licence.

The Living Licence concept removes guesswork from planning and implementing enhancements on the Clark Fork river. At the core is a means to update and amend the licence terms as new issues and needs surface. With the continued participation of stakeholder groups who are actively involved in implementation of the Living Licence, everyone has a stake in its success.

To ensure broad-based participation in the collaborative process, Avista worked with 100 individuals from 39 organisations, including several river conservation groups, five Indian tribes, federal agencies from two states and community groups. To help defray some of the costs of participation in such an intensive process, Avista paid travel and other expenses for the groups.

Early implementation of measures in the settlement agreement was also a key outcome of the collaborative process. Under standard FERC procedures, measures are implemented only after the licence has been issued. In the collaborative model, we offered to begin implementation as soon as stakeholders reached the settlement agreement. That meant that Avista would implement a US$225M commitment two years ahead of schedule. Of that, over US$94M is slated for restoration of bull trout habitat, a threatened species, and westslope cutthroat trout, a species petitioned for listing as a threatened species. Half the funds will provide comprehensive watershed restoration, and the balance will support the US Fish and Wildlife Service’s fish passage initiatives.

On 15 February 1999 we filed the Avista licence application for the two Clark Fork projects. It had the full support of the organisations involved in the collaborative negotiation. We expect approval of our application and to receive a new licence in early 2000.

Saving dollars

It is my belief that the collaborative process has saved this company millions of dollars. We have completed a regulatory process quickly, and have protected our vital interests. The agreement better positions Avista to take advantage of new opportunities in the energy services industry. The collaborative process has ensured the continued profitable operation of highly valuable hydro power assets, and at the same time provided for major enhancements to the region’s important native trout fisheries.

There are two vital elements of a collaborative relicensing process: •Negotiate in good faith, and aim to understand each party’s interests. Hydro operators must get beyond the positional bargaining common in these proceedings, and work directly with stakeholders to negotiate commitments of mutual value.

•Be inclusive and build ownership: this is a classic example that people tend to support the things they help create.

At nearly 800MW of generating capacity, the Clark Fork projects are the biggest in the US to complete a collaborative relicensing process. Between now and 2010, another 11,500MW is up for licence renewal across the country. The approach may not suit each of these projects, but in an age when competition defines the power generation marketplace, collaboration can be the path to profitability.