Bush signed the bill, which was five years in the making, in a ceremony at Sandia National Laboratories in Albuquerque, Mexico. It has a budget of US$12.3B over 10 years and had already met with vast approval by both the House and the Senate at the end of July.
The bill encourages use of renewable sources of energy in the US. Specifically for hydro power, it makes changes to the Federal Power Act (FPA), adding flexibility to the Federal Energy Regulatory Commission (FERC) licensing and relicensing process.
Previously, federal land management agencies have been able to insist on a plant’s operating conditions or other requirements, such as the presence of a fishway. But under the new act license applicants or other parties may propose alternative conditions to those set by the agencies.
If the alternative is found to be more economical and does not limit energy impacts, the land agency is obliged to accept it. Furthermore, when considering whether or not a fishway is required, the secretary of the agency must consider the effects that it would have on the plant’s development. Equal consideration must be given to factors such as water supply, food control, navigation and energy supply and cost.
The Energy Policy Act of 2005 also creates a 10 year tax credit that will apply to hydro power production, if placed in service prior to 1 January 2008. New production incentive payments will be granted for the development of new hydro power at dams and for increasing efficiency at existing hydroelectric plants. The payment is US$0.18/kWh, limited to US$750,000 per calendar year.
Bush said that the bill will strengthen the US economy and make the country more secure, although the President stressed that it would not solve the US’ energy problems overnight.
National Hydropower Association (NHA) Director Linda Church Ciocci said: ‘Bush clearly recognises the importance of hydro power by resolving the two largest issues confronting the resource: the broken licensing process and the lack of growth despite significant growth potential. The [Energy Policy Act of 2005] virtually guarantees substantial hydro power growth for the first time in almost two decades.’
She added that the bill is the most important piece of legislation for the hydro power industry in a very long time.
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