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Bill to ease US hydropower permitting, FERC rate challenges heads to White House

The U.S. Senate passed a sprawling water infrastructure bill that aims to streamline permitting of hydroelectric projects and give consumers more opportunity to challenge changes to certain Federal Energy Regulatory Commission-jurisdictional power rates.

The Senate on Oct. 10 voted 99-1 to pass the America's Water Infrastructure Act of 2018, or S. 3021, sending the bill to President Donald Trump's desk for signing. Republican Sen. Mike Lee of Utah, the bill's lone opponent, voted against the legislation because he said it funded many projects that should be supported by state and local governments. The Senate's vote came after the U.S. House of Representatives passed the legislation unanimously by a voice vote on Sept. 13.

Among other things, the bill authorizes federal funds to modernize drinking water infrastructure and invest in ports, channels, locks, dams and other parts of the maritime and inland waterways systems.

"This infrastructure facilitates energy trade flows across the United States and around the world, helping to ensure that American and global consumers have access to affordable energy," American Petroleum Institute President and CEO Michael Sommers said in voicing support for S. 3021. Sommers said over 40% of the more than 2.0 billion tons of goods moving along the U.S. waterborne transportation system in 2016 were crude and petroleum products.

The bill includes a title on energy that mostly is geared to easing the permitting and licensing process for hydropower projects. S. 3021 would increase the length of preliminary permits from the Federal Energy Regulatory Commission for hydropower projects from three years to four years. FERC also would be able to extend preliminary permits by an additional four years beyond their original expiration dates compared to a current maximum extension of two years. A preliminary permit does not authorize construction but prevents another developer from applying for a license for the site while the preliminary permit holder studies the feasibility of developing the project.

In addition, S. 3021 would extend the deadline for projects to start construction by as much as eight years from the date included in the license and establish an expedited licensing process for hydropower development at non-powered dams. The latter section would require FERC, the U.S. Army Corps of Engineers and the U.S. Department of Interior to form a list of existing non-powered federal dams that have the greatest potential for non-federal hydropower development.

Another part of the bill would promote construction of closed-loop pumped storage projects by creating an expedited licensing process for those facilities, with the goal of arriving at a final decision on license applications within two years of a developer filing the application.

The hydropower industry and its allies in Congress have worked to lower permitting barriers for the energy source, with new hydropower projects sometimes taking a decade or longer to license. Those permitting hurdles may be dragging on construction of new hydropower capacity. In the first half of 2018, the U.S. added 108 MW of new hydroelectric generating capacity, above the previous year's first-half period but down from 243 MW in the same period of 2016, according to an analysis by S&P Global Market Intelligence.

The America's Water Infrastructure Act of 2018 also contains a key legislative proposal — long pushed by some lawmakers — that would make challenging certain new FERC-jurisdictional power rates easier. The bill would allow parties to seek rehearing or court review of power rate changes that take effect automatically if FERC fails to either accept or deny them because it has a 2-2 split, vacancy, recusal, lack of quorum or incapacity. Currently, parties have few options for seeking to overturn those rate changes because FERC in such cases issued no order that would be subject to rehearing or appeal.

The proposal mirrors legislation that some Massachusetts lawmakers in Congress introduced following a controversial ISO New England power capacity auction for the 2017-2018 commitment period. Consumer groups and other critics alleged that Energy Capital Partners LLC announced the closure of its Brayton Point coal-fired plant in Massachusetts shortly after purchasing the facility in order to drive up capacity prices for the company's other plants in the region. The four-member FERC that was seated at the time was deadlocked on whether to approve the auction results, meaning the commission did not issue a final order that could be challenged and the new rates went into effect by operation of law.