The Cushman experience10 June 1999
Garth Jackson* explains why Tacoma Public Utilities has been relicensing one of its hydro facilities for over 25 years
In the annals of FERC relicensing, there are few projects that can stir reactions from almost everyone in the industry. Unfortunately for the City of Tacoma in Washington state, the Cushman project may be chief among them. Despite years of effort, over US$6M in studies and the best intentions, little has gone right during the 25 years that the project has been wading through the relicensing process.
Cushman has supplied Tacoma with 124MW since it was constructed in the 1920s on the Skokomish river. Fifty years later, when Tacoma applied to renew the expiring licence, FERC reviewed the application and comments, then drafted a finding of non significance and came very close to issuing a new licence. But in the energy crisis of the 1970s President Jimmy Carter modified the Federal Power Act, encouraging domestic energy resources, including hydro. FERC was flooded with new applications and was forced to put relicences on the back-burner. It took almost a decade to deal with the new applications before concentrating on relicensing.
By the time FERC was able to pick up the project again, laws had changed, regulations had changed and attitudes had changed. Regulations required FERC to continue with Tacoma’s original application, but the Commission’s requests for additional information were nothing less than requirement to start the licensing process all over again. Water quality certification, shoreline management, mandatory conditioning authority, multi-stage consultation all added to the process. Possibly the most significant result of the delay was the development of organised opposition.
The Skokomish Tribe has been convinced by independent consultants that Tacoma Public Utilities is malevolent and, through the Cushman project, has unjustly denied them their rightful wealth. The tribe has been persuaded to view relicensing as a opportunity to recapture what is rightfully theirs through claims of past damage. While there are interests within the tribe who genuinely care about their cultural heritage, the consultants exploited it as a point of legal leverage.
Objections and delays were introduced at every opportunity in the relicensing application. FERC dismissed a significant portion of the requests, but the remainder required 60,000 pages in environmental reports. Tacoma disputed the need for much of this work, and motivation for these study demands became all the more doubtful when it was noticed that the Tribe rarely, if ever, accepted the results of the studies. Every effort was made to improve communication. Routine co-ordination meetings were sponsored, but these soon became an opportunity to present a united front against Tacoma. Agreements came close to acceptance, only to be shattered by the Tribe’s consultants. Every year that passed resulted in deeper and deeper divisions and greater and greater demands.
Every opportunity to gain leverage was exploited to its maximum and issues were considered repeatedly. Eventually Tacoma realised there was little hope for an economically advantageous project, so it made the unprecedented proposal to dedicate the entire market value of the project to environmental enhancement. The entire projected net revenue of the scheme over the next 30 years, US$100M, was offered to be used on environmental programmes agreed by the parties. This offer would have tripled power costs, taking them to the limit of market value, but the barrier was quickly bypassed.
The final FERC licence now issued will take costs to nearly three times market value, a guaranteed loss to Tacoma of US$2.5M each year. The resource agencies’ demands will exceed even this, rising to nearly six times market values, and the tribe’s expectations are more than double even this proposal.
Currently, the project has a FERC licence that satisfies no one. The tribe has filed claims of nearly US$6B against FERC and Tacoma. The licence and FERC’s authority are expected to be challenged in court. There is a very real possibility that the project will be shut down and the entire termination process will be exercised and challenged in court. Everyone will lose, the environmental impacts will grow and a tremendous opportunity will be wasted.
Learning lessons from this experience is difficult because the licensing environment is always changing. The process is so lengthy that there will be many new hurdles to address in any licence process. There are some common themes. Project owners should be actively involved with their community, local government and affected tribes. Co-operation and agreement is the essence of the licensing process and it is unrealistic to expect that these working relationships can be ignored for many years and then suddenly developed when a licence expires. Problems should be resolved as they appear: delay will only increase the cost, turn licence participants into adversaries and greatly diminish the authority of the licence holder. As it takes longer to resolve the licence, more expensive problems will materialise and become prominent. It is much better to identify and settle these issues concurrently and as quickly as possible.
For over 70 years, Cushman has been a valuable asset for Tacoma Public Utilities and the local community. Affordable power, recreation and flood control were both the promise and reality of this great work. But needs change, attitudes change and project owners must change with them. Cushman is an example of an attempt to use the authority of a long term licence to forget an obligation for too long, and then crowd seven decades of adjustment into a few brief years. This is a formula for failure.
Tacoma has made huge efforts, shown the greatest concern and backed it up with 100% of the project value, only to find all of it dismissed and the future of the project placed in jeopardy. Tacoma has learned a great deal from this experience and hopefully this lesson will prove beneficial to other project owners.