Power & Pipes

FERC, CFTC, and State Energy Law Developments

FERC has requested comments on whether to revise its policy for establishing the length of license terms for hydroelectric projects located at non-federal dams. If FERC ultimately makes longer license terms easier to achieve, not only would it revise extremely longstanding policy, but it could significantly reduce the economic burden of licensing hydro projects. Given the number of hydro projects up for renewal in the coming years, an extension of the license term could make relicensing more financially attractive.

Under FERC’s current policy, projects at non-federal dams receive a 30-year term where there is little or no authorized redevelopment, new construction, or environmental mitigation and enhancement. A 40-year term is provided for a license involving a moderate amount of such activity, and for projects with an extensive amount of such activity, a 50-year license term is applied. This tiered licensing policy is intended to balance a number of economic and environmental factors that arise in the context of hydroelectric project development.

Recent proceedings have called into question the length of a new license and the factors FERC weighs when setting a license term. While FERC has yet to deviate from its policy, the agency now appears open to doing so and is actively seeking comment on whether it should embrace any of the following options:

  • Retain the existing license term policy.
  • Add to the existing license term policy the consideration of measures implemented under the prior license such that the expense of prior investments receives some weight.
  • Replace the existing license term with a 50-year default license term, which is the standard term for projects at federal dams.
  • Add a more quantitative cost-based analysis to the existing license term policy.
  • Accept longer license terms negotiated in an applicable settlement agreement.

FERC’s request for comments asks for comments on specific questions related to each possible policy change.

Comments are due January 24, 2017.