A report released in December 1999 confirmed what many members of the US hydro power industry have been fearing for some time. Annual Energy Outlook 2000 was produced by the US government’s own independent statistical information agency, and it predicts that regulatory actions will limit hydroelectric capacity at existing plants through to 2020. ‘Our industry is threatened by a bureaucracy that is unnecessarily costly, burdensome and unpredictable,’ says Linda Church Ciccoi, executive director of the national-hydropower-association, which has been campaigning for legislative reform of the licensing process.

In her role as director of hydro power licensing at the Federal Energy Regulatory Commission, Carol Sampson says FERC is more than aware of this need for change. ‘One of my fundamental beliefs is that you don’t have to believe something is bad to improve it,’ Sampson says about the traditional licensing process. ‘However we realised that our industries have evolved but we [FERC] have not evolved accordingly. Together, FERC, the hydro power industry, federal agencies and NGOs have realised that there has to be a better way to carry out relicensing.’

One of the main motivating forces behind this was the experience of the Class of ‘93 — the first case of mass relicensing in the hydro power industry, which proved to be costly, time consuming and, for some, very complicated.

‘The world has changed in the 30 to 50 years since projects have been relicensed in great numbers. We now have new requirements that we have to institute,’ Sampson says, referring to the environmental conditions which are imposed on many hydro power licences. ‘The industry and NGOs proved to be real movers in improving the licensing process. They came to FERC and said that they didn’t think the current process was the best way to relicense projects and wanted to make improvements.

‘The industry proposed many ideas and we picked up on these in the alternative licensing process. Industry members have been very active and welcome players in this effort.’

The essence of alternative relicensing, which was formalised by the Commission in October 1997, is that it consolidates parts of the licensing process, effectively shortening the whole procedure. Sampson says that two to three years are being saved by those using the alternative licensing process as opposed to the traditional method. Although the industry welcomed the changes it is predicted that only 50% of relicensees are following this path, while at the same time the industry is uniting to campaign for legislative reform to the whole process (see panel on p33). So does this mean that insufficient changes have been made to meet the hydro power industry’s requirements?

‘For me the glass is always half full,’ says Sampson. ‘The process is still only a couple of years old and it is a dramatic change in the way that we do licensing. It is important that people get used to it and are comfortable with its use.

‘To be honest that’s what we are starting to see happen. More people are using it successfully and are saving time and money. So it is being advocated by these companies and picked up on by others. From our perspective we’re pleased that as many as 50% are using the process and I will always hope for more.’

Sampson explained how the Commission is also turning its attention to the traditional licensing process and is undertaking various administrative reforms. FERC is assessing how it works with other federal agencies and how communication and relationships can be improved. ‘We’re looking at the simple elements of how licences are processed among the federal agencies and how we can work together to make it more efficient and effective,’ she said.

FERC is focusing internally and Sampson believes that there is enormous ground to gain here. Relicensing classes have been established where FERC, resource agencies, NGOs and hydro power plant owners meet in different states. They are taught what the licensing processes are, the roles they have to play in these and about the benefits of interaction. The beauty of this, Sampson explains, is that as it is a five-day course relationships are formed. So when people go into relicensing they already know one another.

Improved communication seems to be the key to the future effectiveness of relicensing — and Sampson has been advocating this since joining FERC in February 1998. ‘In my view we need to understand one another. FERC and other federal agencies need to work closely with the industry. We tried hard in 1999 to open up our doors — not to just allow people in but to go out and meet them. We have to work out how we can fit all these pieces together effectively.’

Sampson’s background is with the resource agencies, and she has used this to her advantage to open doors in these agencies too. ‘The industry may have wondered about me to start with as I came from the resource agencies,’ she says. ‘But I have sure tried hard. We meet more frequently with the industry and it has worked valiantly, meeting us

more than half-way to improve the licensing process.

‘The most challenging part of my job is to create understanding and to make folks build positive relationships that will take us through the next decade of relicensing.’

Looking to the future Sampson believes that the hydro power licensing process has a bright future. ‘I am told by employees at FERC that with the

Class of ‘93 and the environmental conditions imposed on projects, many people thought that we would have uneconomic projects. But this has not really happened.

‘Now, however, we must remain diligent to ensure the industry survives. Our challenge at FERC is to mitigate the negative and maximise the positive aspects of hydro power.’

Licensing in perspective

All non federal hydro power projects – 50% of the US installed hydroelectric capacity – fall under the remit of FERC. These 1600 hydro power projects and 2000 dams account for 5% of total electric generation in the US.
In the Class of ’93, 157 hydro power projects were due for relicensing- some are yet to be completed. The Class of 2000 will comprise 220 projects which will require relicensing in 2000-10. Many of these projects are located in the Pacific Northwestern states – home to various salmon species and a topic for much discussion in the US at the current time (see p2 of this issue).

First-hand experience

Idaho-based utility Avista Corp’s plan for relicensing its two dams on the Clark Fork river in Idaho and Montana has been accepted by the Federal Energy Regulatory Commission. In February 1999 Avista made this submission to FERC with more than 30 other stakeholders. Slight changes have been recommended by the Commission’s staff but these are only expected to cost an additional US$25,000 on top of the proposed US$225M expenditure. Avista expects to spend the majority of this money on fish habitat improvement and the maintenance of recreation facilities during the 45-year term of its new licence.
The two dams, Noxon Rapids and the Cabinet Gorge on the Clark Fork river, generate 466MW and 231MW of power respectively – 40% of the utility’s generating capacity. Over a period of four years Avista Corp, formerly the Washington Water Power Company, has worked out a compromise licensing agreement with a number of environmental organisations, sports fishing groups, Indian tribes and federal and state agencies (see IWP&DC June 1999, p25).

Utah Power has submitted final applications to FERC for new licences for three hydro dams and power plants on Bear river in Idaho. The dams and hydro plants include the 31m high Soda dam (165MW) constructed in 1925, the 16m high Grace dam (44MW) constructed in 1908 and the 34m Oneida dam
(30MW) constructed in 1913.
Work on relicensing the projects began in 1996, when scientific studies were conducted until the end of 1997. Draft applications were issued in November 1998. FERC is expected to conduct scoping and environmental assessments during 2001 and issue new licences before 2002.
Since the original licences were issued for the projects, the hydroelectric dams along the Bear river have played an important part in the economic development of the region. But, as with many hydro power developments, environmental considerations have become much more important to the general population. Utah Power has been required to balance electric power generation with recreation, fish and wildlife, irrigation and other uses of the land and water.
The utility hosted some 36 meetings to receive input and inform all stakeholders during the relicensing process. A number of scientific studies have also been done to collect and interpret data about the sites. Utah Power said that implementing some of the proposals submitted by interested parties would force the plants to operate at a financial loss. The utility says the Bear river hydroelectric projects are currently operated with only marginal profit due to requirements for managing the system primarily for irrigation and flood control. The company has agreed to modify operations, fund some enhancements along the river and maintain minimum flows below the reservoirs to enhance fish habitat. Once a year, the Grace bypass reach will be flushed with large volumes of water to enhance fish habitat and provide enough water for expert-level whitewater boating. The company will also construct some new parking facilities, portable restrooms and other facilities to improve recreation at targeted sites along the river.

Tracking legislative reform

Linda Church Ciocci, executive director of the National Hydropower Association, gives an update on legislative attempts to reform the licensing process:
Two bills which address the hydroelectric licensing process have been introduced into both houses of Congress (the Senate and House of Represen-tatives). Senator Larry Craig and Congressman Edolphus Towns have gained significant support for the Hydroelectric Licensing Process Improvement Act of 1999 (HR2335/S740) (see IWP&DC January 1999 pp24-5; June 1999 pp22-3).
The Senate bill has six co-sponsors and the House companion bill has 18 co-sponsors, with representation from Democrats and Republicans alike. The bills aim to make licensing a more user-friendly and reasonable process and stress that they do not want to repeal environmental laws.
There remains the strong possibility that relevant committees will consider legislation in spring 2000. The Senate’s water and power subcommittee held oversight hearings at the end of 1999 at which federal agencies, including FERC and the natural resource agencies, testified. They were very productive in educating senators on the inability of the licensing process to balance the many competing river interests at a hydro project. It exposed the inherent flaw of the current regime in which resource agencies have absolute authority without having a proportional level of accountability.
The legislative process is very dynamic and passage in the 106th Congress (by December 2000) while desirable, is by no means guaranteed. Technical legislation of this kind usually does not pass on its own but instead gets attached to larger bills. With major energy initiatives facing Congress, including electric utility restructuring and climate change initiatives, no one can say for sure what path the hydro reform bill will take. But the signs are promising. Although we would like to see passage in the 106th Congress, as it is a presidential election year, the legislative calendar is greatly foreshortened and we may not see passage until the 107th Congress (2001-2).
But just having the bill before Congress has produced an excellent dialogue on the licensing process. We expect some administrative changes spurred on by the threat of legislation. However with 50% of the US licensed capacity expiring over the next decade, fundamental reform must occur quickly if the US is to maintain its existing hydro power infrastructure.
Another attempt to reform the licensing process comes in the form of a diverse group of nearly 450 public and investor-owned hydro power producers, consumers, businesses, associations, municipalities and environmental, labour and recreational organisations. Called WaterPower: The Clean Energy Coalition the groups recognise the need to safeguard hydro power as a clean energy resource by improving the federal licensing process. The Coalition seeks to secure meaningful improvements to the hydroelectric licensing process, such as those contained in the Craig/Towns bills.
In the end success will be measured by the strength of the improvements made to the licensing process, irrespective of how the remedies are achieved.