[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
MANDATORY CONDITIONING REQUIREMENTS ON HYDROPOWER: HOW FEDERAL
RESOURCE AGENCIES ARE DRIVING UP ELECTRICITY COSTS AND DECREASING THE
ORIGINAL GREEN ENERGY
=======================================================================
OVERSIGHT HEARING
before the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
Wednesday, June 27, 2012
__________
Serial No. 112-117
__________
Printed for the use of the Committee on Natural Resources
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Committee address: http://naturalresources.house.gov
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COMMITTEE ON NATURAL RESOURCES
DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democratic Member
Don Young, AK Dale E. Kildee, MI
John J. Duncan, Jr., TN Peter A. DeFazio, OR
Louie Gohmert, TX Eni F.H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush D. Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Mike Coffman, CO Jim Costa, CA
Tom McClintock, CA Dan Boren, OK
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Jeff Denham, CA CNMI
Dan Benishek, MI Martin Heinrich, NM
David Rivera, FL Ben Ray Lujan, NM
Jeff Duncan, SC Betty Sutton, OH
Scott R. Tipton, CO Niki Tsongas, MA
Paul A. Gosar, AZ Pedro R. Pierluisi, PR
Raul R. Labrador, ID John Garamendi, CA
Kristi L. Noem, SD Colleen W. Hanabusa, HI
Steve Southerland II, FL Paul Tonko, NY
Bill Flores, TX Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
PJon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV
Todd Young, Chief of Staff
Lisa Pittman, Chief Counsel
Jeffrey Duncan, Democratic Staff Director
David Watkins, Democratic Chief Counsel
------
CONTENTS
----------
Page
Hearing held on Wednesday, June 27, 2012......................... 1
Statement of Members:
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 1
Prepared statement of.................................... 3
Napolitano, Hon. Grace F., a Representative in Congress from
the State of California.................................... 3
Prepared statement of.................................... 5
Statement of Witnesses:
Grubich, John R., General Manager, Public Utility District
No. 1 of Okanogan County, Okanogan, Washington............. 23
Prepared statement of.................................... 24
Maisch, Einar, Director of Strategic Affairs, Placer County
Water Agency, Auburn, California........................... 12
Prepared statement of.................................... 13
Reardon, Jeff, Maine Brook Trout Campaign Director, Trout
Unlimited, Manchester, Maine............................... 18
Prepared statement of.................................... 19
Robinson, J. Mark, Principal, JMR Energy Infra, LLC, Reston,
Virginia................................................... 6
Prepared statement of.................................... 8
OVERSIGHT HEARING ON ``MANDATORY CONDITIONING REQUIREMENTS ON
HYDROPOWER: HOW FEDERAL RESOURCE AGENCIES ARE DRIVING UP ELECTRICITY
COSTS AND DECREASING THE ORIGINAL GREEN ENERGY.''
----------
Wednesday, June 27, 2012
U.S. House of Representatives
Committee on Natural Resources
Washington, D.C.
----------
The Committee met, pursuant to notice, at 10:02 a.m., in
Room 1324, Longworth House Office Building, Hon. Doc Hastings
[Chairman of the Committee] presiding.
Present: Representatives Hastings, McClintock, Thompson,
Duncan of South Carolina, Tipton, Noem; Napolitano, Holt,
Costa, Sablan, and Garamendi.
The Chairman. The Committee on Natural Resources will now
come to order, and the Chair notes the presence of a quorum,
which under Committee Rule 3(e) is two Members.
The Committee on Natural Resources meets today to hear
testimony on ``Mandatory Conditioning Requirements on
Hydropower: How Federal Resource Agencies are Driving Up
Electricity Costs and Decreasing the Original Green Energy.''
We will now begin with a five-minute statement of the Chairman
and the Ranking Member. And I ask unanimous consent that if any
other Members wish to have opening statements appear in the
record, that they be submitted to the Committee prior to the
close of business today.
So, I will recognize myself for five minutes.
STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON
The Chairman. Today's hearing is another step by this
Committee to restore the promise of hydropower, a renewable,
emissions-free, and low-cost source of energy.
In the early part of the last century, visionary leaders
and engineers constructed multi-purpose dams and reservoirs,
like the Grand Coulee and Hoover Dams, to harness the energy of
moving water and, in high-water periods, capture water for low-
water periods. That, to me, is still a sound concept today.
In the Central Washington congressional district I have the
honor to represent, we have both Federal and non-Federal
hydroelectric dams. Together they produce more hydropower than
any other congressional district in the Nation. Despite their
success, hydropower is under assault from those bent on
litigation and over-regulation. This Committee has focused
intensely on Federal dams and canals, but today's hearing takes
a new turn. Instead, we will examine Federal regulation on non-
Federal dams, which account for over half of the Nation's
hydropower production.
The resource agencies under the jurisdiction of this
Committee, whether it's the National Marine Fisheries Service,
the U.S. Fish and Wildlife Service, the Forest Service, the
National Park Service, or the Bureau of Land Management, all
play a large role in the cost, size, and scale of non-Federal
hydropower, and even play a role in whether some dams should
exist through the mandatory conditioning authorities. It
appears they do so in a vacuum that ignores economic, societal
or environmental reality.
Current law enacted by the Energy Policy Act of 2005 allows
hydropower developers to propose alternative to Federal
regulations. But, like all laws, it has its shortcomings
because of the interpretation and implementation of complex,
conflicting Federal laws and regulations.
The re-licensing of hydropower dams is an opportunity to
responsibly renew a clean, non-carbon-emitting, renewable
energy source. But there have been abuses. The re-licensing
process should not be a hostage-taking opportunity for Federal
agencies to demand a ransom to be paid to fund their wish
lists, or for Federal agencies to push a covert dam removal
agenda by imposing conditions so onerous that hydropower
licenses are surrendered instead of renewed.
Regrettably, what I just said is not hyperbole. It is
happening. It is a reality. And I think it is unacceptable.
Some utilities and organizations are fearful to even
discuss real and reasonable reforms out of a concern that that
resource agency will punish them. For example, some agencies
try to take another bite out of an apple during the rare
occasion they don't get what they want. In my State, the
Okanogan PUD in north central Washington is experiencing that
right now with an agency that threatens to impose costly
requirements not even related to dam licensing. The end result
could be a financially infeasible project that will not
generate power or provide jobs at a dam that has been there for
almost a century.
We will hear today that, despite its longstanding success,
hydropower remains a stagnant form of energy compared to other
electricity resources. I believe that's because of lawsuits by
taxpayer-funded litigants and because of Federal agencies that
stifle innovation and energy growth.
We have heard of the vast potential for more hydropower
development but to accomplish this we need to modernize and
update our laws. This Committee has already acted on two bills,
and had numerous oversight hearings, but more can and will be
done. Some of that may be controversial, but I believe that
that debate needs to start sooner, rather than later.
So, we are fortunate today to have the best and brightest
here today who represent non-Federal power development, and
thus, job creation. And I am very pleased that I have somebody
from my State of Washington and somebody that will be in my
district in the next Congress, and I will make that proper
introduction.
And with that, I yield back my time, and I recognize the
gentlelady from California.
[The prepared statement of Mr. Hastings follows:]
Statement of The Honorable Doc Hastings, Chairman,
Committee on Natural Resources
Today's hearing is another step by this Committee to restore the
promise of hydropower--a renewable, emissions-free and low-cost source
of energy.
In the early part of the last century, visionary leaders and
engineers constructed multi-purpose dams and reservoirs, like the Grand
Coulee and Hoover Dams, to harness the energy of moving water and in
high water periods capture water for low water periods. That is still a
sound concept today.
In the Central Washington congressional district I have the honor
to represent, we have both federal and non-federal hydroelectric dams.
Together they produce more hydropower than any other congressional
district in the nation.
Despite their success, hydropower is under assault from those bent
on litigation and over-regulation. This Committee has focused intensely
on federal dams and canals, but today's hearing takes a new turn.
Instead, we will examine federal regulation of non-federal dams, which
account for half of the nation's hydropower production.
The resource agencies under the jurisdiction of this Committee--
whether it's the National Marine Fisheries Service, the U.S. Fish and
Wildlife Service, the Forest Service, the National Park Service or the
Bureau of Land Management--play a large role in the cost, size and
scale of non-federal hydropower and even play a role in whether some
dams should exist through their mandatory conditioning authorities. It
appears they do so in a vacuum that ignores economic, societal or
environmental reality.
Current law enacted by the Energy Policy Act of 2005 allows
hydropower developers to propose alternatives to federal regulations.
But, like all laws, it has its shortcomings because of the
interpretation and implementation of complex, conflicting federal laws
and regulations.
The relicensing of a hydropower dam is an opportunity to
responsibly renew a clean, non-carbon-emitting, renewable energy
source. But there have been abuses. The relicensing process should not
be a hostage-taking opportunity for federal agencies to demand a ransom
to be paid to fund their wish lists, or for federal agencies to push a
covert dam removal agenda by imposing conditions so onerous that
hydropower licenses are surrendered instead of renewed. Regrettably,
this is not hyperbole. It is happening. It is reality. And it is
unacceptable.
Some utilities and organizations are fearful to even discuss real
and reasonable reforms out of concern that the resource agencies will
punish them. For example, some agencies try to take another bite out of
the apple during the rare occasion they don't get what they want.
Okanogan PUD in northeastern Washington is experiencing that right now
with an agency that threatens to impose costly requirements not even
related to dam relicensing. The end result could be a financially
infeasible project that will not generate power and provide jobs at a
dam that has been there for almost a century.
We will hear today that despite its longstanding success,
hydropower remains a stagnant form of energy compared to other
electricity sources. I believe that's because of lawsuits by taxpayer-
funded litigants and because of federal agencies that stifle innovation
and energy growth.
We have heard of the vast potential for more hydropower
development. But to accomplish that, we need to modernize and update
our laws. This Committee has already acted on two bills and had
numerous oversight hearings, but more can and will be done. Some may be
controversial, but this debate needs to start.
We are fortunate to have some of the best and brightest here today
who represent non-federal power development and job creation. I
particularly want to welcome John Grubich of the Public Utility
District Number 1 in Okanogan County. I look forward to his and
everyone's testimony.
______
STATEMENT OF THE HON. GRACE NAPOLITANO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mrs. Napolitano. Thank you, Mr. Chairman. And sorry Mr.
Markey wasn't here, so I am sitting in for him, and his
introductory is what I am going to be reading.
President Teddy Roosevelt once said that our rivers are a
public good, and that any permit to obstruct them for reasons
and on conditions that seem good at the moment should be
subject to revision when changed conditions demand. In the
early 20th century, Congress allowed hundreds of permits to
build dams on public rivers. By 1986, the licenses were set to
expire, and Congress decided that these licenses should reflect
the public's interest through mandatory conditioning
requirements, the subject of two days' of hearings.
For years, Congress found FERC had been far too deferential
and unquestioning when it came to hydropower interests. FERC
was not properly taking into account the full range of impacts
of these dams on the environment, on the Tribes, and on
recreational opportunities.
Under the leadership of Energy and Commerce Chairman
Dingell and Subcommittee on Energy and Power Chair Markey,
Congress passed in 1986--and President Reagan signed into law--
the Electric Consumer Protection Act, required FERC to give
equal consideration to recreation, to fisheries, to energy
conservation and energy generation when issuing licenses.
Legislation limited FERC's ability to reject the advice of
expert agencies and Tribes concerning fish, wildlife, and
tribal needs. It allowed for the operation and development of
hydropower to be consistent with the public's interest, not
just hydropower's interest.
The law passed in 1920 was amended by Congress in 2005,
when it passed the Energy Policy Act. The bill included
provisions that, in their final form, allowed for consideration
of alternative conditions during re-licensing, as well as to
consider any disputed facts relating to fish waste. Many
Democrats, including Mr. Markey, had strongly opposed earlier
versions. An equitable compromise was worked out in the end,
and final provisions gave the industry some additional
procedural options, and did not compromise the fundamental
integrity of the environment.
The hydro industry was even satisfied with this final
result. The National Hydropower Association said at the time
that the 2005 hydropower licensing provision will result--and I
am quoting--``in increased energy production and energy
savings, all while preserving important environmental values.''
So, what has happened since? Well, according to the data
obtained from FERC, licenses filed after 2005 took a third of
the 6-year process, compared to licenses filed prior to that.
Now, it takes two years for FERC to act on completed
application that promotes hydropower without compromising other
public values. Two years for a license that lasts fifty years,
half a century.
And why are we here today? Apparently, the 2005 reforms
passed under a Republican Congress and signed by President
George W. Bush did not go far enough. By its title, today's
hearing suggests the hearing's outcome: allowing the resource
agencies to have mandatory conditioning powers is a bad idea. I
disagree. Next chapter in the history of hydropower will
involve the industry working smarter, not harder. And we are
already seeing this in transition. It will involve hydropower
licensees using new technologies to get more power out of their
existing dams.
We will hear from a witness today who will describe dam
efficiencies that open 1,000 miles of river while increasing--I
repeat--increasing power generation. The bill introduced
today--actually, yesterday, along with Ranking Member Markey--
called Hydro2.0 will help all of Bureau of Reclamation hydro
facilities achieve a win-win outcome. The American people
deserve nothing less.
And I look forward to hearing the testimony from the
witnesses who have joined us this morning, and I yield back the
balance of my time.
[The prepared statement of Mrs. Napolitano follows:]
Statement of The Honorable Grace F. Napolitano, a Representative
in Congress from the State of California
Thank you Mr. Chairman.
In ancient Greece the basic unit of society was the ``oikos''. This
word, which is the root of modern words like ``economy'' and
``ecosystem,'' meant ``household'', ``family'', or ``house''.
Here in the House, we are charged with taking care of our
household--the lands and waters of the United States--and in doing so,
we take care of our family--the American people. Our family depends on
a flourishing economy and healthy ecosystems. These concepts are rooted
together.
Take for example the fact that our rivers, when healthy, generate
economic benefits through fishing, recreation, and hydropower.
Teddy Roosevelt knew as much, insisting that rivers are a public
good, and that ``any permit to obstruct them for reasons and on
conditions that seem good at the moment should be subject to revision
when changed conditions demand.''
Well, in 1986, changed conditions did make demands.
At the time, dam re-licensing represented very poor housekeeping.
For years, FERC had been far too deferential and unquestioning when it
came to hydropower interests. The agency was not properly taking into
account the full range of impacts of these dams on the environment, on
the Tribes, and on recreational opportunities.
So under the leadership of Energy and Commerce Chairman Dingell and
Subcommittee on Energy and Power Chair Markey, Congress passed and
President Regan signed into law the Electric Consumer Protection Act,
which required FERC to give equal consideration to recreation,
fisheries, energy conservation, and energy generation when issuing
licenses. The legislation limited FERC's ability to reject the advice
of expert agencies and tribes concerning fish, wildlife and tribal
needs.
It allowed for the operation and development of hydropower to be
consistent with public interests, not just hydropower's interests.
Congress next amended the hydropower licensing provisions of the
Federal Power Act in 2005 when it passed the Energy Policy Act. This
bill included provisions that, in their final form, allowed for
consideration of alternative conditions during relicensing as well as a
hearing to consider any disputed facts relating to fishways. Many
Democrats, including Mr. Markey, had strongly opposed earlier versions.
But an equitable compromise was worked out in the end.
The final provisions gave the industry some additional procedural
options, but they did not compromise the fundamental integrity of the
balancing system put in place in 1986.
The hydro industry was even satisfied with this final result. The
National Hydropower Association said at the time that that the 2005
hydropower licensing provision ``will result in increased energy
production and energy savings, all while preserving important
environmental values.''
So, what has happened since? According to data that obtained from
FERC, licenses filed after 2005 took a third of the time to process
compared to licenses filed prior to that. It now takes about two years.
Two years for FERC to act on a completed application that promotes
hydropower without compromising other public values. Two years for a
license that lasts half a century.
So, why are we here today? Apparently the 2005 reforms, passed
under a Republican Congress and signed by President George W. Bush,
don't go far enough. The biased title of today's hearing suggests that
they have already decided that allowing the resource agencies to have
mandatory conditioning powers is a bad idea. I think they are wrong.
The next chapter in the history of hydropower will involve the
industry working smarter, not harder, and we are already seeing this
transition. It will involve hydropower licensees using new technologies
to get more power out of their existing dams. We will hear from a
witness today who will describe dam efficiencies that opened 1,000
miles of river while increasing power generation. A bill I introduced
yesterday along with the Ranking Member Markey, ``Hydro 2.0'' will help
all Bureau of Reclamation hydro facilities achieve win-win outcomes.
The American people deserve nothing less.
I look forward to hearing the testimony from the witnesses who have
joined us this morning.
______
The Chairman. I thank the gentlelady for her statement. And
we now have a panel of witnesses here, and I want to thank all
of you for being here.
We have Mr. J. Mark Robinson, who is a Principal of JMR
Energy Infra, LLC, in Reston, Virginia; Mr. Einar Maisch, the
Director of Strategic Affairs for the Placer County Water
Agency in Auburn, California--thank you for being here; Mr.
Jeff Reardon, the Maine Brook Trout Campaign Director for Trout
Unlimited, in Manchester, Maine; and, from my State of
Washington, Mr. John Grubich, General Manager of the Okanogan
PUD district in Okanogan, Washington.
If you haven't been here and testified in front of Congress
before, let me tell you how it works. Your full statement will
appear in the record, but you will have five minutes to make
your oral statements. And I would ask you to keep your remarks
to five minutes, if you can. The way the timing lights work,
when the green light comes on, it means you are doing very
well, and when the yellow light comes on, it means there is one
minute to go. When the red light comes on, it means that your
five minutes have expired. I would hope that you would try to
wrap up your remarks in that time period.
So, with that, Mr. Robinson, we will start with you. And
you are recognized for five minutes.
STATEMENT OF J. MARK ROBINSON, PRINCIPAL,
JMR ENERGY INFRA, LLC, RESTON, VIRGINIA
Mr. Robinson. Thank you, Mr. Chairman, Members. I
appreciate the opportunity to talk to you today about
hydropower licensing and mandatory conditioning authority. But
first I would like to identify my bias. I always do this
whenever I testify or when I talk to groups. My bias is seeing
energy from the ground up. Most people I dealt with at FERC,
and a lot of people in the district, that matter, have their
bias looking at energy from the markets back. You get very
different answers on what the problems are, depending upon
where your biases are. And I just wanted everybody to know mine
consists of seeing what is necessary to get something built,
how do you go about doing that.
Example of how that bias affects, if you ask people why
aren't we building electric transmission in this country, the
market people at FERC will say, ``Well, we got to get cost
allocation right, we have to get the incentives in place to
make the markets--send the signals to get the transmission
built.'' If you asked me when I was at FERC--and people did,
believe it or not--I would say you don't have a regulatory
process which allows for someone to be in charge of siting
electricity transmission and navigating through all the
problems that come up with any type of energy infrastructure
siting. So that is my bias, and everything I say from here on
out will reflect that.
Hydropower. It is in trouble. It has been in trouble for a
long time. And nothing seems to be changing that. If you go
back and look at the statistics for different forms of
generation and their contributions to our generation mix in
this country--which is at about 1,000 megawatts, more or less--
hydropower in 2000 was 79 gigawatts of power. And I think I
said 1,000 megawatts; I meant 1,000 gigawatts. In 2000,
hydropower was 79 gigawatts. In 2010 hydropower was 79
gigawatts, in terms of its net contribution to our electric
generation.
Hydropower has been stagnant for the last decade, and
probably much longer than that. I have been involved with
hydropower for over 35 years, 31 of which at FERC. And once we
left the mid-1980s, it has pretty much stayed the same since
then.
If you look at other forms of generation during that same
time period, natural gas in an example where hydropower gained
nothing over that decade. Natural gas added 187 gigawatts of
power. In fact, in just two years of that decade, natural gas
added more generation than all of the current hydropower which
exists today. And if you think it was because there was cheap
gas back then, gas in those--in that two-year period hit $6.87.
And during that 10-year decade it went over $10. So even though
we are in a cheap gas phase now, during that period of building
of natural gas, we were not.
Look at the nuclear power industry. Georgia Power right now
is building the--I can't say that word--the Vogtle plants down
in Georgia. They estimate that their cost of that facility is
going to be $6,363 per installed kW. Now, hydro varies in terms
of its capital outlay, and there is a fuel charge, of course,
associated with nuclear, as well. But hydro, on average, is
about $3,000 per installed kW.
And if you think that hydro just is not available, the
reason we are developing nuclear plants that cost twice as much
and gas fire generation that has a fuel charge associated with
it, DOE, just a couple of months ago, came out with a report
that said there was 12 gigawatts of available hydropower in the
U.S. that didn't require any new dam construction.
So, hydropower suffers from an unlevel playing field. What
can we do about it? The unlevel playing field is that we have
distributed decision-making when it comes to hydropower, and
you have concentrated decision-making when it comes to natural
gas and nuclear. By distributed decision-making, what I mean
there is that you have a number of agencies who can come in
with mandatory conditions and decide whether or not something
is in the public interest by how much they--burden they want to
impose upon a particular project. The Klamath River Project is
a perfect example where talked-about fish passage facilities
were in the $200 million range. It is no wonder people started
talking about how do we get rid of this project when they were
faced with a $200 million bill, potentially, under section 18.
The way that we can fix that dispersed decision-making is
with something called the Six Principles of Energy
Infrastructure Development. I won't bore you with all six of
those principles. But one of them in particular, I think, is
significant, and that is to have an agency, a group, who is
given that authority to make that public interest call. Other
people can have mandatory conditioning authority. They can
provide that input into that agency. But somebody has to be
able to say this is in the public interest or not to build this
project. And it is not just a matter of I have a narrow focus,
I have one aspect of the project that I want to make sure
happens, and we are going to get that project, that aspect into
this license, regardless of what the overall public interest
determination is.
So, if I could make one recommendation to you, it is the
same recommendation that FERC made to you in 2001 in a report
that was filed pursuant to section 603 of the Energy Act of
2000, and that is that you need to curb the dispersed decision-
making process, invest one agency with that overall public
interest determination that looks across all aspects of the
projects and decides, ``Is this hydropower project in the
public interest?''
Thank you very much. I appreciate the opportunity.
[The prepared statement of Mr. Robinson follows:]
Statement of J. Mark Robinson, Principal, JMR Energy Infra, LLC
Mr. Chairman and Members of the Committee:
My name is J. Mark Robinson and I am the Principal with JMR Energy
Infra, LLC. In this role I advise clients on the development of major
energy infrastructure including liquefied natural gas (LNG) export
facilities, natural gas pipelines, electric transmission lines, and,
more germane to this hearing, hydropower projects regulated by the
Federal Energy Regulatory Commission (FERC). Prior to my current
activities I was with FERC for 31 years starting as an aquatic
ecologist in the hydropower program and finishing as the Director of
the Office of Energy Projects (OEP) from 2001 to 2009. During that
later period OEP was responsible for the licensing, administration, and
safety of approximately 1,600 non-federal hydropower projects.
I would like to thank you for the opportunity to speak today on
mandatory conditioning requirements and their impact on hydropower
development. The comprehensive nature of FERC's licensing program
addresses all siting and operational issues with the full participation
of federal and state agencies while attempting to ensure the timely and
cost effective development of hydropower projects found to be in the
public interest. Timeliness and cost effectiveness, however, are
virtues that with some regularity go by the wayside as a result of a
widely dispersed decision making process exemplified by the mandatory
conditioning authority given to multiple agencies.
The remainder of my testimony will describe the efforts that have
been made to efficiently integrate mandatory conditions into the
licensing process, the issues that still detract from the ability to
move on hydropower projects that are in the public interest, and a
rational approach to the licensing of hydropower that would improve all
agencies' ability to reach a decision jointly on needed projects while
including mandatory conditions.
I. Licensing Hydropower Projects and Mandatory Conditions
Mandatory conditions take several forms in the licensing of
hydropower projects but in essence they all share one attribute--the
condition is provided by a separate federal or state agency and the
FERC must include the condition in any license issued giving that
condition the protective umbrella of the Federal Power Act (FPA) in
terms of enforcement. There are three mandatory conditions that are
common to the licensing process as described here.
FPA Section 4(e)--In cases where the proposed licensed project
would be located on a federal reservation, the federal agency
responsible for managing that land, typically the Department of
Agriculture and the Department of the Interior, can file conditions to
protect the reservation. These conditions are required to be included
in any license issued. For example, the Secretary of the Interior
prescribes mandatory conditions for projects on Indian reservations,
and the Secretary of Agriculture does so for projects in national
forests.
FPA Section 18--The FPA of 1935 contained Section 18 that gave
authority to the Secretary of Commerce to ``prescribe'' fishways. In
1970, Section 18 was amended to also give such authority to the
Secretary of the Interior. The authority to prescribe fishways applies
to new licenses as well as original licenses. Fishways can costs tens
of millions of dollars and thus have a significant impact on the
viability of not only new proposed projects but also existing projects
up for relicensing. The fishways prescribed by the Secretaries of
Commerce and of the Interior must be included in any license issued.
Clean Water Act (CWA) Section 401--Under Section 401 of the CWA, a
license applicant must obtain certification from the state or
interstate pollution control agency verifying compliance with the CWA.
Conditions included with the issuance of the 401 Certificate are
considered conditions of any license issued by FERC. Although the CWA
Section 401 conditions are frequently the most significant impediment
to timely licensing of hydropower projects the focus of this testimony
will be on FPA Section 4(e) and 18 mandatory conditions.
Although not a mandatory condition in the sense described above
there are another set of conditions required by the FPA that should be
noted here--Section 10(j) conditions. Section 10(j) of the FPA,
requires fish and wildlife conditions included in licenses be based on
conditions proposed by federal and state fish and wildlife agencies. If
the FERC fails, in any respect, to adopt an agency's recommendation, it
must explain not merely why it disagrees with the agency, but why the
agency's recommendation is inconsistent with the FPA or other
applicable law. This test of inconsistency with the law raises Section
10(j) conditions to near mandatory levels.
It should also be noted that in 2005 the Congress recognized a
growing concern with the use of mandatory conditions and provided some
relief. The Energy Policy Act of 2005 (EPAct) required the Departments
of the Interior, Commerce, and Agriculture to provide for: 1) expedited
trial-type hearings on contested mandatory conditions; and 2)
alternatives to agency proposed mandatory conditions. Parties to a FERC
license proceeding may request a trial-type hearing on mandatory
conditions before an administrative law judge (ALJ). These hearings are
limited to ``sorting out the facts of a case'' and are not used to
decide whether a condition or prescription is appropriate for economic
or policy reasons. The conditioning agency, however, must take into
account the ALJ's opinion prior to issuing final conditions for
inclusion in a FERC license. More significantly, the conditioning
agency must accept proposed alternative mandatory conditions if they
find: (1) that an alternative condition would adequately protect and
use the reservation (federal lands) or that an alternative fishway
would be as protective as a fishway initially prescribed, and (2) that
an alternative condition would cost significantly less or would
increase energy production. In making a decision, the conditioning
agency must give equal consideration to the effects of the condition
adopted and alternatives not accepted on certain energy and
environmental criteria.
Under the FERC's Integrated Licensing Process, mandatory conditions
are first provided to the parties after as much as three years of
studies performed in cooperation with the conditioning agencies. Once
the application for licensing is filed and found acceptable for
processing the conditioning agencies file their ``preliminary
conditions'' that are then available for review by the applicant and
other parties. If a trial type hearing is requested pursuant to the
Energy Policy Act of 2005 then that procedure is followed while the
FERC prepares a draft National Environmental Policy Act (NEPA)
document, either an environmental assessment or and environmental
impact statement. Regardless of whether a trial type hearing is
requested the conditioning agencies may file modified conditions after
the draft NEPA document so they may be included in the final NEPA
analysis.
As the FERC found in its 2009 review of the use of the trial type
hearing most of these proceeding end with a negotiated settlement (13
of the first 16 requests for trial type hearing were settled and
withdrawn). This process of providing preliminary and modified
conditions provides an opportunity for the conditioning agencies to
lead with what some may consider unreasonable conditions as a tool for
providing leverage in any settlement discussions that are ongoing.
Knowing that the applicant must affirmatively pursue a trial type
hearing and that the agencies have an opportunity to provide modified
conditions later in the FERC process places the conditioning agencies
in a superior position during any negotiations. The playing field is
significantly tilted in favor of the conditioning agencies.
II. Challenges to the Hydropower Development
The FERC's role in licensing hydropower has been diminished over
the last few decades. Prior to the FPA of 1935 the only significant
role played by other agencies was outlined in Section 4(e). Originally
the FERC reviewed Section 4(e)'s conditions as advisory. However, in
1984, the Supreme Court's Escondido decision found that 4(e) conditions
were mandatory. This left the FERC with a choice of either finding that
the 4(e) conditions were in the public interest and include them
unaltered in any license issued or find that the conditions were
inconsistent with the broad public interest standard of FPA Section
10(a)(1) and decline to issue the license. Unlike the FERC and its
requirements under Section 10(a)(1), agencies with 4(e) authority have
no statutory obligation to adhere to the balanced development standard.
The more narrow focus and interests of conditioning agencies with 4(e)
authority results in conflicts with the license applicant caught in the
middle.
The 1935 passage of the FPA included Section 18 authority for the
Secretary of Commerce to ``prescribe'' fishways.
In American Rivers v. FERC (9th Cir. 1999) the Court ruled that
FERC lacked authority to determine whether Section 18 conditions were
in fact fishways. As a result of these judicial rulings the FERC's only
discretion with respect to mandatory conditions it might otherwise
conclude are not in the public interest is simply to deny the license
application. The conflict between a broad public interest determination
by FERC and the more narrow purpose of mandatory conditions continues.
In May 8, 2001, the FERC filed a report with Congress pursuant to
Section 603 of the Energy Act of 2000. This report entitled, ``Report
on Hydroelectric Licensing Policies, Procedures, and Regulations--
Comprehensive Review and Recommendations'', was prepared after
consultation with conditioning agencies to determine how to reduce the
cost and time of obtaining a license under the FPA and to propose
needed legislative changes. A review of this report and recommendations
indicate that not much has changed in the last 11 years.
The finding of the 2001 report included that the time from the
filing of a license application to an order issuing license was
slightly more than three and a half years with many proceedings taking
substantially longer. A review of all 16 hydropower licenses issued in
2011 (the last full year available for comparison) by FERC shows that
the average time from filing the application to licensing was 3.6 years
with the longest being 8 years. The 2001 report also concluded that ``.
. .the underlying source of most delays was a statutory scheme that
disperses decision-making among federal and state agencies acting
independently of the FERC's proceedings.'' This dispersed decision-
making remains the primary cause of not only delay but also additional
costs associated with the preparation of the application and the cost
of mandatory conditions.
The 2001 report captures the findings of the 100 pages of analyses
with the following paragraph referring to dispersed decision making:
``The same statutory scheme also ensures that the Commission
has scant control over the costs of preparing a license
application or of the costs of environmental mitigation and
enhancement. These expenditures are frequently mandated in
state water quality certification or mandatory federal agency
conditions required pursuant to FPA Sections 4(e) and 18, and
override the Commission's balancing of all relevant factors
affecting the public interest.''
A related issue in timely licensing can be described as extended
agency authority. This is where agencies will take the authority they
have been granted covering an aspect of the project (e.g., prescribing
fishways pursuant to Section 18 of the FPA) and utilize that singular
authority to duplicate the action of the siting agency to make an
overall public interest determination. This unnecessary and
counterproductive duplication of the public interest determination can
results in regulatory uncertainty when an applicant does not know which
forum will ultimately decide if a project should be constructed. This
is not to say that the agencies with conditioning authority need to
agree with the FERC's decision, but rather that those agencies should
focus on their aspect of the project and condition accordingly while
leaving the overall siting determination to the agency given that
authority.
This dispersed decisional authority as represented by mandatory
conditions does take its toll on hydropower development. A comparison
among various electric power generation sources demonstrates the
stagnation felt by the hydropower development community.
Between 2000 and 2010, according to the U.S. Energy Information
Administration (EIA) Annual Generator Report, the net summer capacity
for hydropower remained constant at 79 gigawatts (GW). No net increase
in hydropower capacity for a decade. During this same period EIA
reports that natural gas capacity increased by 187 GWs. In just two
years between 2000 and 2002 more natural gas generation was added to
the Nation's supply than all existing hydropower capacity today. It
should be noted that according to EIA natural gas prices reached a high
of $6.82 during this two year period and reached a high of $10.79
during the decade. Natural gas was not cheap but the market ignored
hydropower and moved to natural gas.
Another comparison follows from the nuclear power industry. Utility
executives are reasonably concerned with diversifying their generation
sources. Georgia Power as an example is developing the Vogtle Nuclear
Plant at an estimated cost of $6,363 per installed kilowatt. Hydropower
projects vary in terms of their construction costs but EIA puts the
average cost of construction at approximately $3,000 with no fuel
costs. Utilities will pay twice the capital cost for generation and
incur a fuel cost as well while available hydropower goes undeveloped.
The Department of Energy, in a report issued this year entitled,
``An Assessment of Energy Potential at Non-Powered Dams in the United
States,'' estimated that without building a single new dam there were
12 GWs of available hydropower ready for development. No new dams
required, half the cost of constructing nuclear power, no cost fuel
compared to the variable cost of natural gas and yet hydropower remains
stagnant for at least the last decade. Certainly the issue of dispersed
decision making, as represented by multiple agencies with mandatory
conditioning authority and first identified by FERC in 2001, should be
considered as a primary reason for the complete lack of progress in the
development of this Nation's most significant, in terms of existing
capacity, renewable resource.
III. A Rational Licensing Process with Mandatory Conditions
A rational process for the authorization of any energy
infrastructure including hydropower development includes six basic
principles:
1. Exclusive Jurisdiction--one lead agency that has been
designated by congress as the only agency that has siting
authority
2. Pre-filing--A system for quickly identifying issues and
determining if there are any fatal flaws early in the process
3. One Federal Record--All agencies must work together to
create one administrative record and all agencies are bound to
that one record for judicial review
4. Disciplined Schedule--All agencies have to act within the
time frame set by the lead agency with repercussions on
authorities if an agency delays their decision
5. Expeditious Judicial Review--Failure of an agency to follow
the schedule set by the lead agency or to provide conditions
narrowly focused to their authorities results in immediate
referral to the federal court system
6. Eminent domain
Designating one agency as having exclusive siting authority would
not usurp the decisional authority of the mandatory conditioning
agencies. Rather it recognizes that one agency has been vested with the
authority to determine whether the proposal is in the public interest
while others have been vested with authorities that go only to some
aspect of the project. This would specifically address the issue of
extended agency authority where mandatory conditions are used to
achieve larger agency goals like basin-wide restoration. The Alaska Gas
Pipeline Act of 2004 specifically addressed this issue by
distinguishing between the lead agency and other agencies that are
handling aspects of the project.
The development of one federal record for all agencies that are
acting under federal law is at its core just a matter of good
government. Currently, at times agencies go to the effort of developing
records covering the same issues under different time frames. Requiring
all agencies to work together under the schedule of the lead agency
would reduce waste, improve decision making, and reduce the potential
for conflicting conclusions. Finally, to provide discipline to the
process the agencies need to know that, should they not meet the
schedule or extend their authorities beyond designated aspect of the
project, their actions would be reviewed by the federal court.
With these six principles in place, energy infrastructure has the
potential for development. As an example the natural gas pipeline
industry has a legislative/regulatory environment that encompasses all
six principles. During the period from 2000 to 2010 more than 15,000
miles of new interstate pipeline were constructed. This included one
1,700 mile, 42 inch diameter pipeline across eight states that took
only three and one half years to go from the application being filed at
FERC to completing construction and natural gas flowing from the
Rockies to the Pennsylvania border.
By comparison the hydropower industry only benefits from two of the
six principles--pre-filing and eminent domain. As a consequence
licensing can continue for excessive periods of time with associated
costs. As an example the relicensing of the existing Orville hydropower
project in California has been ongoing for nearly 10 years with many of
those years directly related to the resolution of mandatory conditions.
In practice there are no statutory curbs in the existing licensing
process to the delays associated with resolving mandatory conditions
and as a consequence no certainty in the regulatory process. Given
these types of licensing uncertainties there is little incentive for
the potential proponent for a new hydropower project to invest. The
ability of a developer to see that the first dollar invested in
pursuing a new hydropower project has a reasonable chance to result in
a return is critical to infrastructure development. Hydropower suffers
from lacking this legislative/regulatory environment that incorporates
the six principles of energy infrastructure development.
IV. Conclusion
The FERC's licensing process is designed to ensure that all issues
are carefully considered based on extensive input from all affected
parties. Mandatory conditions can be integrated into this process
without disruption or unnecessary costs. By developing a statutory/
regulatory process based on the six principles of energy infrastructure
development that restrains the abuse of the mandatory conditioning
authority, developmental interests will once again turn to our Nation's
original green energy.
______
The Chairman. Thank you very much, Mr. Robinson, for your
testimony.
We have next Mr. Einar Maisch, Director of Strategic
Affairs for the Placer County Water Agency in Auburn,
California. Welcome, and you are recognized for five minutes.
STATEMENT OF EINAR MAISCH, DIRECTOR OF STRATEGIC AFFAIRS,
PLACER COUNTY WATER AGENCY, AUBURN, CALIFORNIA
Mr. Maisch. Thank you, Mr. Chairman, Ranking Member
Napolitano. I appreciate the opportunity to be here today to
talk to you. Placer County Water Agency owns and operates a
hydroelectric project in the Sierra Nevada, just west of Lake
Tahoe. It is a 224-megawatt, produces about a million megawatt
hours a year. And we are--our license is up in 2013, so we have
been very involved in the re-licensing of that project. We have
also been very involved in the re-licensing of two neighboring
projects, because of an interbasin transfer that provides water
supply in Placer County that PG&E and Nevada Irrigation
District own.
The role of hydro, I think, was summarized well in your
opening statement. It is clean energy. It doesn't seem to make
a lot of sense that we would be reducing clean energy in an era
when we are trying to reduce greenhouse gas emissions, and
taking other sources of generation offline.
I think, more importantly, besides the fact that it is
clean energy, it is also critical to the regulation of the
grid. It provides ancillary services that allow non-
dispatchable, renewable energy sources to be integrated into
the grid. I think up in your area, Bonneville Power has
recently demonstrated the capabilities and the strains that
excessive amounts of wind energy put on the system. So hydro is
not only a clean energy source, it allows other clean energy
sources to come into the system. And reducing hydro, I think,
is not helpful to our overall goals in this country.
Re-licensing is long and expensive. You know, the history
in our neighborhood is that folks are losing 8 to 10 percent of
their generation. The ILP was intended to help that situation,
impose deadlines. They thought deadlines would reduce costs and
streamline the process. Unfortunately, all it does is end up
with not enough information. And when you have not enough
information, the mandatory conditioning authorities end up
imposing more onerous conditions. They become overprotective,
they do adaptive management, require ongoing studies. And what
you end up with is license reopeners, and no real assurances
and no quantifiable costs. It is a very difficult business
model.
PCWA, in its experience, started well early. We started
five years before our license conditions. We had a very
collaborative process. We put a lot of money into it overall.
We spent $37 million on our re-licensing. We are going to lose
5 percent of generation, we are going to spend another $20
million on capital costs. Our O&M costs are going up by $2.4
million, and we are making cash payments to resource agencies
of $1 million a year. These are things that we have agreed to
in our new license.
The neighboring re-licensings in Nevada County, PG&E and
NID, they are looking at much higher losses, roughly double the
losses that we have. And because they have not exactly gone at
it the way that we did, they just complied with the timelines
required and the ILP, the process was much more contentious. We
watched that. Resource agencies are much more aggressive.
What we need is we need ability to go back to balancing
resources. You know, the Federal Power Act requires FERC to
balance resources, but it doesn't require the resource agencies
to do any balancing when they submit their mandatory
conditions. And the Act of 2005 that amended the--and gave us
the ability to file comments, that really hasn't worked out.
Comments are routinely ignored. If you want to file alternative
conditions, you do so completely on the resource agency's
grounds. They make you submit all kinds of information about
what effects it has, balancing resources, and yet they are not
required to provide any of that information. They are not
required to justify their conditions, state what the purpose of
the conditions are, or any information regarding the balancing
of the proposed conditions.
We think that the answer to this is either to make the
resource agencies, as a condition of submitting mandatory
conditions, do the balancing, do a NEPA process, go through an
open and transparent process, or give up their mandatory
conditioning and give it to FERC and let FERC do the balancing
under their authorities under the Federal Power Act. Thank you.
[The prepared statement of Mr. Maisch follows:]
Statement of Einar Maisch, Director of Strategic Affairs,
Placer County Water Agency
INTRODUCTION:
Chairman Hastings and Ranking Member Markey; My name is Einar
Maisch; I am the Director of Strategic Affairs for the Placer County
Water Agency (PCWA) located in Auburn, California. Thank you for the
opportunity to address the Natural Resources Committee today on the
important topic of Mandatory Conditioning Requirements on Hydropower.
PCWA is a public agency established by an Act of the California
Legislature in 1957 to provide water and energy services within Placer
County. PCWA is governed by a five-member elected Board of Directors.
PCWA is the owner and licensee of the Middle Fork American River
Project (MFP), Federal Energy Regulatory Commission (FERC) Project No.
2079. The MFP is located in northern California, west of Lake Tahoe, on
the west slope of the Sierra Nevada Mountains. The MFP serves as a
multi-purpose water supply and hydroelectric project. The Project was
licensed in 1963 and began operations in 1967. It has a generating
capacity of approximately 224 megawatts (MW) and produces an average of
1,000,000 megawatt-hours (MWh) per year of clean, carbon-free energy.
The MFP is also used to divert and store water to meet municipal,
industrial, and agricultural demands in western Placer County.
PCWA's 50-year FERC license expires on February 28, 2013. In my
capacity as Director of Strategic Affairs, in cooperation with the
County of Placer, I have overseen the relicensing of the MFP. In
addition, I have directed PCWA's active participation as a stakeholder
in the relicensing of two FERC hydroelectric projects in the Yuba River
Watershed, the next watershed north of the American River. These
projects include Nevada Irrigation District's (NID) Yuba-Bear
Hydroelectric Project, FERC Project No. 2266 and Pacific Gas and
Electric's (PG&E) Drum-Spaulding Project, FERC Project No. 2310. In
these proceedings, PCWA's primary interest is to protect both current
and future consumptive water deliveries for the residents of Placer
County, from the Yuba-Bear/Drum-Spaulding projects.
PCWA has intimate knowledge of the FERC's Integrated Licensing
Process (ILP) and the mandatory conditioning authority that certain
resource agencies have under the Federal Power Act (FPA).
ROLE OF HYDRO IN THE NATION'S ENERGY PORTFOLIO:
Hydropower represents a source of clean, renewable energy,
providing approximately 10% of the country's electric generating
capacity. The energy produced from hydro-generation is not only
emission-free, which facilitates the country's overall objective of
reducing greenhouse gases, but is also one of the least-costly forms of
energy available to consumers. Furthermore, due to its ability to be
dispatched quickly, hydropower provides valuable ancillary services to
support the overall quality and reliability of the electric grid.
Only recently, from the experiences in the Bonneville Power
Administration's territory and others, have many come to understand
that hydropower's grid regulation capability is critical to
incorporating more non-dispatchable renewable energy sources (i.e.,
wind and solar) into the nation's energy portfolio.
RELICENSING PROCESS OVERVIEW:
The relicensing process is a long and expensive process with
decision-making authority spread across a range of federal and state
agencies pursuing different statutory missions. The relicensing of
hydroelectric projects is resulting in an average loss of approximately
8-10% of the nation's hydropower. In addition, implementation of new
license conditions has dramatically increased capital and operating
costs. In some cases, the loss of generation revenue combined with
increased costs has resulted in hydroelectric projects being deemed
uneconomical, resulting in decommission.
The Integrated Licensing Process
As of July 23, 2005, the ILP is the default FERC process for the
licensing of hydroelectric projects. The ILP offered several advantages
over the previous licensing processes, most importantly defined
deadlines for participation through the process associated with:
Study plan determination;
Requests for additional information; and
Filing of terms and conditions by resource agencies.
Unfortunately, however, if the licensee strictly adheres to the ILP
schedule, there may be insufficient time to complete the required
studies and have sufficient information available to resolve conflicts
with relicensing participants on potential new license conditions,
prior to submittal of the License Application. While the ILP timeline
may appear to confine the study activities and costs, it often results
in FERC prolonging the licensing proceeding until studies are completed
or encourages the resource agencies to mandate very conservative
license conditions based on either a lack of information or
insufficient time for the parties to jointly understand the
implications of the study results. The resource agencies often also
request license reopeners or impose conditions that require extensive
studies after the license is issued and adaptive management that allows
the agencies to modify their mandatory conditions over the term of the
license, once study results become available.
Under these scenarios the licensee is left with uncertain costs and
conditions for years into the new license, which makes efficient
budgeting and planning exceedingly difficult.
PCWA's Relicensing Experience
For the relicensing of the MFP, PCWA made the strategic decision to
invest in the development of the study plans and implementation of
scientific studies early in the process. In fact, PCWA began
relicensing activities five years prior to filing of the Notice of
Intent (NOI) and Pre-Application Document (PAD). PCWA was the first
license applicant to submit stakeholder-approved study plans in its
PAD. PCWA also obtained FERC approval to expedite the study plan
process. Early implementation of the study plans allowed PCWA to
complete the studies in sufficient time for the results to be used by
relicensing participants to collaborate on new license conditions. PCWA
submitted a Final License Application (FLA) which included detailed
management and monitoring plans. The resource agencies filed
preliminary terms and conditions on August 2011 which were generally
consistent with the FLA and subsequent negotiations between the
parties. FERC's draft National Environmental Policy Act (NEPA) document
should be distributed for public review in mid-July 2012.
PCWA has worked collaboratively with resource agencies, non-
governmental organizations (NGO), and other stakeholders for seven
years on this project. Overall, we feel that the stakeholders in our
relicensing have appreciated PCWA's approach, and they have been
reasonable in setting conditions. We believe that this success was
directly related to PCWA's early engagement in the process and active
collaboration with relicensing participants.
PCWA has spent about $37 million on the relicensing of the MFP to
date. Under the preliminary terms and conditions filed by the mandatory
conditioning agencies, PCWA expects to lose about 5% of annual energy
generation as a result of increased instream flows requirements. We
expect to spend approximately $20 million on capital improvements; our
annual operation and maintenance (O&M) costs will increase
approximately $2.4 million per year and direct cash payments to
resource agencies will amount to another $1 million per year. Believe
me, under the current regulatory framework, this is what success looks
like.
The PG&E and NID Relicensing Experience
In the northern adjacent watershed, the story is different. PG&E is
relicensing its Drum-Spaulding Project (FERC Project No. 2310)
collaboratively with NID's Yuba-Bear Hydroelectric Project, (FERC
Project No. 2266). The Drum-Spaulding/Yuba-Bear projects are highly
integrated, operating as a single system with over 50 individual
diversions. It is one of the most complex hydropower systems in
California, if not the nation. Many of its facilities date back to the
California Gold Rush era and are used to support both power generation
and delivery of consumptive water. However, complexity does not
translate into high revenues from power generation.
PG&E and NID made the strategic decision to be less aggressive in
the development of study plans and implementation of environmental
studies compared to PCWA; however, they did comply with every ILP
regulatory deadline. This approach was likely due to the overall
complexity of the system, an order of magnitude more complex than
PCWA's MFP, and the inability of the project revenues to support the
scope of studies expected by resource agencies.
With less timely information available in the Yuba-Bear/Drum-
Spaulding relicensing, resource agencies have been more aggressive, and
their current proposal will result in a loss of approximately 10% of
average annual generation, in addition to significant capital
improvements, and increased operating costs. As a consequence, PG&E
recently asked FERC to divide the Drum-Spaulding Project into more than
one licensed project, because electric generation revenues may not be
sufficient to support continued hydropower operations of the entire
system.
The residents of Placer County are dependent upon operations of the
Drum-Spaulding Project and its water conveyance facilities to deliver
consumptive water. These conveyance facilities have provided water to
the people of Placer County since the late-1800's. The new license
conditions and the uncertainty about the fate of the project, now
licensed to PG&E, are obviously of great concern to PCWA and its water
customers.
RESOURCE BALANCING:
The FPA gives FERC legal authority to issue licenses for non-
federal hydroelectric projects. During the relicensing process, FERC
must give ``equal consideration'' to developmental and non-
developmental values including:
Utilization of the site's hydroelectric potential;
Potential benefits to interstate or foreign commerce;
Adequate protection, mitigation, and enhancement of
fish and wildlife (including their spawning grounds and
habitat); and
Other beneficial public uses, including energy
conservation, irrigation, flood control, water supply,
recreational opportunities, and other aspects of environmental
quality.
It is important to note that under FERC jurisdiction the baseline
for the relicensing of a hydroelectric project is the existing
environmental conditions associated with the current project facilities
and on-going O&M.
Mandatory Conditioning
Under Section 4(e) of the FPA, resource agencies may establish
mandatory conditions for lands within their federal reservation. Under
Section 18, certain resource agencies can prescribe mandatory fishways
prescriptions. However, the mandatory conditioning agencies are not
required to give equal consideration to developmental and non-
developmental values. The only requirement for mandatory conditions
under Section 4(e) is that they do not interfere with the purpose for
which the federal reservation was created or acquired, and that they
are deemed necessary for the ``adequate protection and utilization'' of
such reservation.
These resource agencies can impose mandatory conditions that result
in substantial loss of hydropower generation, require costly
infrastructure modifications, and increase O&M costs without
considering the overall effects of the conditions on project economics,
energy supply, water supply, and any other public benefits. The
resource agencies are simply following their statutory mission.
Although we can all cite examples where resources agencies have been
overzealous in prescribing mandatory conditions, the problem lies in
the guidance provided under current law. The resource agencies do not
have to establish mandatory conditions with an eye toward balancing
environmental and societal values.
Since the FPA does not allow FERC to modify or reject mandatory
conditions filed by resource agencies, there is no mechanism to
establish final license conditions that are balanced and provide for
equal consideration of other developmental and non-developmental
values. This directly conflicts with FERC's authority under the FPA.
In addition, the resource agencies do not consider filing of
mandatory conditions to be a federal action requiring analysis under
NEPA. We strongly disagree with this interpretation. Because these
conditions are mandatory and must be accepted by FERC, the act of
submitting the conditions should be considered a federal action, and
therefore the resource agencies should be required to complete an
independent review under NEPA that includes a detailed analysis of
direct, indirect or cumulative effects of the federal action. The NEPA
analysis conducted by FERC for issuance of the new license is completed
after resource agencies have issued their mandatory conditions, and it
therefore cannot satisfy NEPA for issuance of the mandatory conditions.
Challenging Mandatory Conditions
Under current regulations, the licensee and other parties have
three options to respond to preliminary mandatory conditions including
submitting: 1) comments; 2) alternative conditions; and/or, 3) requests
for a trial-type hearing.
Experience shows that comments filed on mandatory conditions are
routinely ignored and at best become a footnote in the administrative
record.
Filing of alternative conditions is a more extensive process that
requires the licensee to meet specific criteria. The alternative
conditions must be submitted within 30 days following filing of the
preliminary terms and conditions, including mandatory conditions, with
FERC.
The filing of alternative conditions must include:
A description of the alternative;
An explanation of how the alternative will provide
the adequate protection and utilization of the reservation;
An explanation of how the alternative, as compared to
the preliminary conditions, will
Cost significantly less to implement or
Result in improved operation of the project
works for electricity production;
An explanation how the alternative will affect (1)
energy supply, distribution, cost, and use; 2) flood control;
(3) navigation; (4) water supply; (5) air quality; (6) other
aspects of environmental quality; and
Specific citations to any scientific studies,
literature, etc relied on to support proposal.
The party proposing an alternative condition must provide extensive
evidence comparing its alternative to the resource agency's preliminary
mandatory conditions across a range of different factors, both
environmental and economic. In contrast, the mandatory conditioning
agency itself, in developing and filing its preliminary mandatory
conditions, is not required to consider or present evidence on any of
those factors, or on the effects of the conditions it has mandated.
Furthermore, alternative conditions are evaluated by the mandatory
conditioning agency within the confines of ``adequate protection and
utilization of the reservation.'' This approach does not provide for
equal consideration of other environmental and societal values. In
other words, there is no balancing.
So what happens once resource agencies receive alternative
conditions? Under the current regulations, the resource agencies are
not obligated to respond in a timely manner or consult on the
alternative conditions. The resource agencies are only obligated to
provide an explanation of the rationale for rejecting the alternative
conditions concurrent with the filing of their modified terms and
conditions. At this point in the process, the licensee has no ability
under the alternative condition process regulations to challenge the
mandatory conditions.
The request for trial-type hearing on a mandatory condition is an
even more arduous and expensive process. This request must also be made
within 30 days following the filing of preliminary terms and conditions
by the resource agencies. The request for hearing must be solely based
on a ``disputed issue of material fact.'' What constitutes an issue of
material fact is ill-defined. The hearing process is focused on whether
the mandatory conditions are supported by the record, in the context of
the resource agencies' narrow objective--protection and utilization of
the federal reservation. The hearing process does not evaluate the
mandatory conditions in a broader perspective of balancing other
environmental and societal values.
To further compound the problem, the resource agencies can issue
modified mandatory conditions later, which can be substantially
different from the preliminary conditions, with no clear process for
requesting a trial-type hearing on the modified mandatory conditions.
RECOMMENDED PROCESS IMPROVEMENTS:
We urge Congress to revise the licensing regulations to incorporate
greater balance in the development of license conditions for
hydroelectric projects. Specifically, we present two options to revise
the mandatory conditioning process.
Option 1 includes:
Require resource agencies to broaden the scope of
their analysis when developing mandatory conditions, beyond
just the narrow mission of their respective agency and adhere
to the broader requirement of balancing between developmental
and non-developmental values that is currently required of
FERC.
Establish that agencies filing mandatory conditions
with FERC are engaging in a ``federal action'' and require
independent environmental review under NEPA; including a
comprehensive analysis of the direct, indirect, and cumulative
impacts of their action under the same public review process
required for every other federal action.
Require resource agencies to clearly define the
objective of each mandatory condition with an accompanying
rationale and disclosure of impacts in an open and transparent
manner, thereby, adhering to the same standard of disclosure
and explanation required of the licensee and other parties
submitting Alternative Conditions.
Require agencies to promptly consult and respond to
Alternative Conditions prior to FERC's Draft NEPA document,
rather than allowing the agencies to ignore the requests for
months and only address them during the filing of modified
terms and conditions, after the Draft NEPA document has been
issued.
Modify the hearing process regarding the basis for
challenging mandatory conditions such that concerns over
balancing between developmental and non-developmental values
can be addressed, rather than restricting the hearing process
to only ``issues of material fact.'' Further, there should be a
clear process for requesting a trial-type hearing on modified
terms and conditions.
Option 2 includes:
A more direct and cost-effective approach for
revising the relicensing process--simply eliminate mandatory
conditioning authority and have resource agencies use their
authority to file recommendations under Section 10(a) and 10(j)
of the FPA. This would allow FERC to fully evaluate and balance
these recommendations in a broader context.
I would like to thank Chairman Hastings and Ranking Member Markey
for allowing me to share my thoughts on this important topic with the
Natural Resources Committee. Revising the mandatory conditioning
process is paramount for the Nation's hydroelectric generation
resources.
______
The Chairman. Thank you very much, Mr. Maisch, for your
testimony.
Next we have Mr. Jeff Reardon, from the Maine Brook Trout
Campaign Director for Trout Unlimited in Manchester, Maine.
And, Mr. Reardon, you are recognized for five minutes.
STATEMENT OF JEFF REARDON, MAINE BROOK TROUT CAMPAIGN DIRECTOR,
TROUT UNLIMITED, MANCHESTER, MAINE
Mr. Reardon. Chairman Hastings, Ranking Member Napolitano,
thank you for the opportunity to testify today. I work for
Trout Unlimited, a national non-profit conservation
organization with more than 140,000 volunteers organized into
400 chapters from Maine to Alaska. Our mission is to conserve,
protect, and restore North America's cold water fisheries and
their watersheds. And our chapters annually invest over 600,000
hours of volunteer time to achieving this mission.
We believe strongly in working collaboratively to achieve
meaningful conservation results that provide benefits to a
variety of stakeholders, including hydropower generators and
electric rate payers. I have worked for TU for 13 years. And
increasingly, our work in Maine has succeeded in finding
cooperative solutions to vexing challenges.
Trout Unlimited has consistently applied a collaborative
approach to hydropower re-licensing. I have personally been
involved in re-licensing more than 20 hydroelectric dams
representing TU. Based on my experience, I believe the re-
licensing process has gotten better over time at catalyzing
solutions that balance the needs of the hydropower industry,
fish and wildlife, and the citizens who use our nation's
rivers. Mandatory conditioning authorities are critically
important tools for achieving this balance. In our experience,
the resource agencies have been sparing and judicious in how
they apply these authorities.
For a time following passage of the Electric Consumers
Protection Act, the new authorities, combined with a huge wave
of project re-licensings in the early 1990s, strained FERC's
effectiveness and the effectiveness of the resource agencies.
Recognizing this, TU and other resource users worked very hard
with FERC, the resource agencies, and the industry to seek
improvements. One such improvement was the establishment of the
cooperative licensing process in which stakeholders and the
licensee worked cooperatively from study design through permit
approval and, in many cases, through implementation to find
common ground and durable solutions.
These cooperative processes have led to resounding
successes, not just in Maine, but also in places like the Clark
Fork Basin of Montana, with Avista Power, and the Deschutes
River Basin of Oregon with Portland General Electric.
I would like to take a few minutes to highlight some
successful projects I have worked on in Maine. The Kennebec
River Basin, where I live and where I have done the bulk of my
work, offers proof that power generation and fisheries can be
better balanced. Between 1993 and 2006, FERC re-licensed 16 of
the 25 dams in the basin. FERC approved surrender and removal
of three of those dams, as well as approving operational
changes at most of the remaining ones. The net result: in-basin
hydro-generating capacity was reduced by less than three
percent, and commercial and recreational fisheries have boomed.
And I mean boomed.
The Sebasticook River, where sea-run fish were absent from
1837 through the 1990s, now supports the largest run of river
herring on the East Coast. And two Maine communities have
regained historic commercial fishing rights they lost nearly
200 years ago.
This spring the fish lift at the Benton Falls Dam has
passed over 1.7 million river herring, and we are midway
through the run at this point. The Kennebec River supports a
popular and growing recreational fishery for American shad--
that is new--and striped bass, which now have access to 20 more
miles of river, part of Maine's $257 million recreational
fishing economy.
A more recent project on the Penobscot River may trump
that. The Penobscot River Restoration Project is an
unprecedented collaboration among the Penobscot Indian Nation,
seven conservation groups, hydro companies, PPL, and Black Bear
Hydro, and State and Federal agencies. The core of the project
is a plan for the non-profit Penobscot River Restoration Trust
to purchase and decommission three dams, removing two of them.
Combined with improved fish passage on the remaining dams owned
by Black Bear, the project will improve access to over 1,000
miles of river habitat for 11 species of sea-run fish, 2 of
them listed as endangered. Enhancements to the remaining
hydropower dams will fully offset any power losses from the 3
decommissioned dams, and may actually result in a small net
increase. Creativity by the dam operators, figuring out how to
get more power out of fewer dams, was crucial to resolving
decades of conflict over fish passage and other issues that go
back to when I was in high school.
Since I started working on hydropower projects, re-
licensing has become far more cooperative, with benefits for
fish, anglers, hydropower production, and local communities.
Our experience has demonstrated that where companies, agencies,
and stakeholders work collaboratively, the re-licensing process
results in positive outcomes for all involved.
Trout Unlimited urges the Committee to foster more of these
successes by encouraging Federal resource agencies to seek
collaborative approaches, and by helping to provide the
resources to these agencies to do that difficult job well.
Thank you again for the opportunity to testify.
[The prepared statement of Mr. Reardon follows:]
Statement of Jeff Reardon, Maine Brook Trout Project Director,
Trout Unlimited
Mr. Chairman:
Thank you for the opportunity to testify before the House Natural
Resources Committee on the mandatory conditioning authorities afforded
the federal resource agencies under the Federal Power Act (FPA). My
name is Jeff Reardon. I am the Maine Brook Trout Project Director for
Trout Unlimited (TU), a national non-profit conservation organization
with more than 140,000 volunteers organized into 400 chapters from
Maine to Alaska. Our mission is to conserve, protect and restore North
America's coldwater fisheries and their watersheds. TU chapters invest
thousands of volunteer hours on their local streams and rivers to
restore habitat for trout and salmon fisheries, and they invest
considerable time in conducting youth conservation camps and taking
kids fishing.
TU works with partners to fulfill our mission. TU staff and
volunteers work with state agencies to clean up pollution from
abandoned mines, with farmers and ranchers to improve riparian habitat
and restore stream channels, and with western irrigators to improve
water management and restore stream flows. TU also works with sportsmen
and -women who care about protecting great fishing and hunting places
on public lands.
TU believes strongly in the principle of working collaboratively to
achieve meaningful conservation results that provide benefits to a
variety of stakeholders, including hydropower utilities and electric
ratepayers. I have been fortunate to work with TU for 13 years, and
increasingly our work in Maine has succeeded in finding cooperative
solutions to vexing challenges.
TU has consistently applied this collaborative conservation process
to hydropower relicensing over the past 20 years. I have personally
been involved in the relicensing of more than 20 hydroelectric dams. As
a member of the Penobscot Trust, TU currently is an owner and operator
of three dams in Maine as part of a project that will soon remove or
decommission the dams, while our partner Black Bear Hydro, LLC will
replace the lost power through hydropower enhancements at other dams.
Based on our experience, I believe that the relicensing process is
getting better and better over time for catalyzing solutions that
balance the needs of the hydropower industry, the fish and wildlife
resources of our rivers, and most importantly, the citizens of our
nation. Mandatory conditioning authorities are critically import tools
for achieving this balance which, among other things, is essential for
sustaining quality hunting and angling opportunities and the $76
billion in economic activity attributable annually to hunting and
angling. Maine's sport fishing industry alone is valued at more than
$257 million per year. In our experience, the resources agencies have
been judicious in how they apply these valuable authorities.
Because there has been so much ``water over the dam'', let me take
a few moments to describe how we got to where we are today.
The FPA, mandatory conditions and balancing river uses
Hydropower is an important source of energy for the nation. Among
its strengths are that it does not cause air pollution or produce
radioactive waste, such as other power sources do, and that fuel costs
for the power producer are zero. But in many places hydropower
development has devastated fisheries and other aquatic resources. Hydro
dams block upstream and downstream fish migration; they alter upstream
and downstream habitat; and they injure or kill fish that pass through
turbines or over spillways. Construction and operation of private and
public hydropower dams have been especially harmful to migratory fish
such as salmon, river herring, shad, striped bass, and eels over the
past 150 years.
For example, in a 2004 report on Atlantic Salmon in Maine, the
National Research Council identified dams as ``the single most
important class of impediments to salmon recovery that can be
influenced by human actions,'' and identified fish passage improvements
as an ``urgently needed action''.
To attempt to provide some balance of river uses while encouraging
and regulating hydropower, the Federal Power Act was established in
1920. The Act mandated the Federal Energy Regulatory Commission (FERC)
to grant licenses for hydropower projects. Because of the poor record
of success in mitigating losses to fisheries from hydro dam operation
and construction, Congress passed the Electric Consumers Protection Act
in 1986. Signed by President Reagan, the law amended the Federal Power
Act. It required that FERC ``give equal consideration to non-power
generating values such as the environment, recreation, fish, and
wildlife, as are given to power and development objectives when making
hydroelectric project licensing decisions.'' The U.S. Fish and Wildlife
Service (FWS), NOAA Fisheries and the Forest Service, with whom we
commonly work, are three of the agencies which have the authority to
impose conditions to require dams to allow fish passage and to mitigate
fish population and fish habitat losses where needed. In exchange for
abiding by these conditions, and the others placed on the projects by
FERC, hydro dam operators get long term licenses to use the river to
generate power, from 35 to 50 years. These long license terms, combined
with no fuel costs, provide dam owners the opportunity to recover
capital expenditures required as a condition of the license.
The new authorities, combined with a huge wave of project
relicensings in the 1990's, strained the ability of FERC and resource
agencies to make the law work effectively. There were some very
positive outcomes, such as the Avista project on the Clark Fork which I
will highlight in a moment. But some hydropower industry
representatives, states, and conservationists had legitimate complaints
about the way FERC and the resource agencies implemented the 1986
changes. TU and other river conservationists worked very hard with FERC
and the resource agencies to seek improvements over the past 20 years.
One such improvement was the establishment of a cooperative
licensing process, in which stakeholders and the licensee work together
from the very inception of relicensing to the conclusion--from the
early studies to permit approval--to find common ground and durable
solutions. Nonetheless, some of the industry went to Congress seeking
dramatic, weakening changes to the mandatory conditioning authorities.
In 2005, Congress rejected substantial weakening of the mandatory
conditions but did make changes to the law.
Provisions in the Energy Policy Act of 2005, signed into law by
President Bush, generally place a higher burden of proof on the
resource agencies to justify their conditions, and provided a ``trial
type'' hearing mechanism to allow industry and other stakeholders to
challenge the proposed conditions.
States also have mandatory conditioning authority through the Clean
Water Act, through which they can protect their water quality standards
by adding conditions to hydropower licenses. In states such as Maine,
this authority has also proven to be very useful in mitigating damage
to fish habitat and in catalyzing meaningful environmental improvements
with little or no loss of generating capacity.
Clearly, fisheries and river recreation and local economies have
benefited from the FPA. But have we lost generating capacity? In most
places, no. According to FERC, changes required by the relicensing
process, including mandatory conditions, result in an average per-
project generating loss of only 1.6%. The Kennebec River basin in
Maine, where I've done the bulk of my work, offers proof that power
generation and fisheries can be better balanced. From 1993-2006 FERC
relicensed 16 of 25 dams in the basin. FERC approved surrender and
removal of 3 dams, as well as approving operational changes at most of
the remaining dams. The net result? In-basin hydro generating capacity
was reduced by about 3%.
And the environmental results have been dramatic. The Sebasticook
River, a tributary to the Kennebec, which saw construction of two
fishways and removal of the Fort Halifax Dam, now supports the largest
run of river herring on the east coast, with more than 1.7 million
river herring passed via the new fish lift at the Benton Falls this
spring. Two Maine communities have already regained the historic
alewife fishing rights they lost when Edwards Dam was constructed in
1837, and other communities are eager to join them. In addition to fish
passed upriver at Benton Falls, these commercial fisheries harvested
more than 500,000 herring for use as bait by Maine's lobster industry.
The lower Kennebec River supports a popular and growing recreational
fishery for American shad, and striped bass, once restricted to below
the head of tide, now range more than 20 miles upstream to provide a
new recreational fishery in the Kennebec and its tributaries. A unique
salmon restoration program on the Sandy River, site of another dam
removal, has generated the best egg-to-smolt yield of juvenile Atlantic
salmon in the U.S.
For freshwater resident fish, improved minimum flows and habitat
restoration projects funded by project licensees have resulted in
improved production and growth of native brook trout, and better
protection for native lake trout that spawn in some headwater
reservoirs.
And for recreational anglers and other river users, there is vastly
improved public access, and more predictable flow scheduling has
enhanced recreational fishing opportunities by improving angler safety,
while also providing more certainty for Maine's whitewater boating
community.
All of these changes were achieved through settlement agreements
with the dam owners that were designed to satisfy legal requirements,
but also to maximize fisheries and recreation benefits while
maintaining hydropower generation.
To repeat, despite the fact that these changes included
decommissioning three dams, basin-wide loss of power was less than 3%--
significantly less than year-to-year variation based on precipitation.
Cooperative licensing processes are on the rise
Over the past 10 years, relicensing has become a far more
cooperative process, with great benefits to fish, fishing, hydropower
production, and local economies. And at reasonable costs. TU is
strongly supportive of the cooperative process. It requires a greater
up-front investment in time and effort from all involved, especially
the licensee, but the rewards can be great. The company, agencies, and
river stakeholders can establish working relationships, implement
mutually beneficial study and work plans, develop and consider options
together, and together make mutually beneficial decisions.
Very simply, in our view the cooperative process is natural
resources decision-making at its best. These are local solutions which
benefit the companies, fish, recreation and local economies. We salute
companies such as PPL in Maine, Portland General Electric in Oregon,
and Avista in Montana and the Northwest for their willingness to show
the way forward, and reap the rewards from it in terms of licenses
granted by FERC in a timely manner, and holding costs down.
Local solutions, local successes
There are a growing number of significant project successes which
demonstrate the benefits of the cooperative relicensing process.
Clark Fork Project in Western Montana (Avista Power)
In the Clark Fork basin, Avista worked with nearly 40
organizations, including TU staff and volunteers, over several years to
create the Clark Fork Settlement Agreement. The agreement applies to
the Clark Fork Project License, which includes the Noxon Rapids and
Cabinet Gorge hydroelectric developments. The settlement agreement
contained 26 protection, mitigation, and enhancement measures which
Avista began implementing ahead of schedule. Likewise, FERC issued the
new license one year before the existing licenses expired. The working
relationships formed through the cooperative licensing process have
endured through project implementation in the form of the Clark Fork
Management Committee, which meets regularly to approve and monitor
implementation efforts.
The Clark Fork Project has made great progress in protecting and
restoring habitat in the basin, including:
Transporting bull trout over Cabinet Gorge Dam for
the first time in 50 years, in an attempt to reestablish
historic migration routes.
Restoring over a mile of Twin Creek (an important
bull trout spawning stream) to its historic channel through a
multi-party effort lead by TU and partially funded by Avista.
Purchase of 871-acres of wetland and riparian habitat
along Bull River, the largest tributary to Cabinet Gorge
Reservoir. These purchases will allow preservation of existing
wetland and riparian habitat.
Obtaining more than $300,000 in grants to leverage
existing funds.
Receipt of the National Hydropower Association's
Outstanding Stewardship of America's Waters Awards award in
2000, 2001, 2002, 2003, 2004, 2005, and 2006.
Significant improvements to recreational facilities
such as Pilgrim Creek Park.
Pelton Round Butte Project, Deschutes River, Central Oregon
The Portland General Electric Company and Confederated Tribes of
the Warm Springs Indian Reservation, after initially competing against
each other to relicense the 350 megawatt Pelton Round Butte
Hydroelectric Project on the Deschutes River in central Oregon,
convened a massive, multi-year, effort that brought together groups
representing industry, tribal, conservation (including TU),
agricultural, municipal, and county interests. Reintroducing ESA-listed
salmon and steelhead in the Crooked, Metolius, and middle Deschutes
rivers upstream of the project was the centerpiece of the new license
and mitigation package. In 2009, PGE and the Confederated Tribes of the
Warm Springs completed a fish intake and bypass project at the Pelton
Round Butte Hydroelectric Project dam, which will enable Chinook
salmon, sockeye salmon, and steelhead to complete their natural life
cycle in the Deschutes River basin for the first time in 40 years.
Additional terms and conditions provided for recreation and
enhanced sustainability in the rural communities located near the
project. Further, the reintroduction effort has lead to additional
resources being dedicated to the Deschutes River basin, and addressing
watershed health issues for the benefit of small Oregon towns
attempting to diversify their economies. Local entities like the Three
Sisters Irrigation District have been able to secure mitigation dollars
associated with the relicensing effort to modernize their water
diversion, delivery, and use systems in a way that streamlines
operations while at the same time providing additional streamflows and
restored access to over 20 miles of historic steelhead habitat on
Whychus Creek.
Penobscot River Project, PPL, Central Maine
Perhaps the most creative hydroelectric project that TU has worked
on, the Penobscot River Restoration Project is an unprecedented
collaboration among the Penobscot Indian Nation, seven conservation
groups, hydropower companies PPL Corporation and Black Bear Hydro, LLC,
and state and federal agencies. On the Penobscot, a Multiparty
Agreement resolved decades of arguments over fish passage, hydropower,
and issues important to the Penobscot Indian Nation. The core of the
project is a plan for the Penobscot River Restoration Trust, the non-
profit organization charged with implementing the agreement, to
purchase and remove the two lowermost dams on the Penobscot River, and
purchase and decommission a third dam at the mouth of the Penobscot's
largest tributary, where a fish bypass will be constructed. Combined
with improved fish passage on the remaining dams, the project will
improve access to over 1,000 miles of river habitat for 11 species of
sea-run fish. Enhancements to the remaining hydropower dams will offset
any power losses from the three decommissioned dams.
Conclusion
These examples show that where companies, agencies, and
stakeholders work collaboratively, the relicensing process can result
in outcomes that meet the needs of the hydropower industry, the fish
and wildlife resources of our rivers and the industries they support,
and the public. TU urges the committee to foster more of these
successes by:
1. Encouraging the federal resource agencies to seek
cooperative approaches to solving hydropower relicensing
challenges, and
2. Helping to provide the resources that the agencies need to
get the job done well.
Thank you for the opportunity to testify.
______
The Chairman. Thank you, Mr. Reardon, for your testimony.
And last, and certainly not least, from my home State of
Washington we have Mr. John Grubich, who is the General Manager
of the Okanogan PUD district in Okanogan, Washington. Mr.
Grubich, you are recognized for five minutes.
STATEMENT OF JOHN GRUBICH, GENERAL MANAGER, PUBLIC UTILITY
DISTRICT #1 OF OKANOGAN COUNTY, OKANOGAN, WASHINGTON
Mr. Grubich. Thank you, Mr. Chairman and Committee members.
I appreciate the opportunity to visit with you today.
One of my business school professors was famous for saying,
``Theory is great, but where does the rubber meet the road?'' I
hope I can illustrate that point to you today.
Okanogan PUD is a small, publicly owned utility, consumer-
owned utility, in the State of Washington governed by three
locally elected officials. It has assets of just about $1
million, annual revenues of about $40 million, just under 100
employees, and it is not a deep pocket.
We have a hydro structure in Okanogan County, Enloe Dam,
that was put into service in 1906. It operated until 1958. And
it is a run-of-the-river project. It provides 9 megawatts of
capacity and 4.5 average megawatts of generation. Okanogan
began this process in 2005, when it filed its preliminary
license permit application. It filed the final license
application in August of 2008. So we are closing in on four
years of regulatory oversight and trying to figure out if we
have a project or not.
Enloe Dam is going to generate, as I said, 4.5 average
megawatts of energy. But it is going to be renewable, green
energy, which everyone in the region is looking for. As Mr.
Robinson indicated, hydropower provides additional benefits
that other alternative sources don't. It provides a reliable,
predictable source of energy when we need it.
The benefits of this project are going to be that it will
increase construction jobs in the area for about 300
construction jobs, should meet the Washington State renewable
energy portfolio standard. It will provide energy to the north
part of Okanogan County, sufficient to service 3,000
residential homes, and it will add reliability to our
distribution system.
Our concern is that the time it takes, and the individual
agencies' ability to add additional requirements to this
project makes it--could possibly make it economically
unfeasible.
One of the agencies, the Bureau of Land Management, has
attempted to make mandatory conditions--not through the FERC
process, FERC has already evaluated those and said that the
vast majority of those requirements were not essential to the
project and not related to the project. However, because we
need a right-of-way from the Bureau of Land Management, they
are saying those conditions will be part of the right of way.
That will increase the project cost by approximately $6
million. So we go from a $31 million project cost to now a $37
million project cost, 20 percent increase.
Again, the timing of it. Once FERC issues a license, BLM
has now said it will take them an additional 18 months to issue
the right of way. That is problematic for us. These two
pictures show that, of anything, this is a no brainer. This is
an existing dam that is a run of the river, that all it takes
is re-establishing the generation capacity to provide
hydroelectric power to citizens of Okanogan County. Thank you.
[The prepared statement of Mr. Grubich follows:]
Statement of John R. Grubich, General Manager,
Public Utility District No. 1 of Okanogan County
Introduction
Good morning, Mr. Chairman and Members of the Committee. I
appreciate the opportunity to speak with you today about the mandatory
conditioning authority of federal natural resource agencies and their
effect on the Enloe Hydroelectric Project (Enloe Project). My name is
John Grubich, and I am the General Manager of the Public Utility
District No. 1 of Okanogan County (District), in Washington. Thank you
very much for the opportunity to come before you to provide a
background on the Enloe Project, describe its potential for generating
green renewable power, the local benefits of construction of the Enloe
Project, and our issues with the federal resource agencies holding
mandatory unilateral conditioning authority over the Enloe Project. I
will address these topics in the order just given.
Background on Enloe Hydroelectric Project
The proposed Enloe Project is a 9 MW hydroelectric facility on the
Similkameen River, near the Canadian border in North Central
Washington. In 2005, the District renewed its efforts to obtain a
Federal Energy Regulatory Commission (FERC) license to restore the
Enloe Project. The history of hydropower development at the Enloe site
spans the last century. Originally developed in 1906, the Enloe Project
ceased operation in 1958 and most of the equipment was removed. The
District's proposed design for redeveloping the Enloe Project would
provide important environmental benefits and, with the restoration of
crest gates, more than double the previous project's generating
capacity to 9 MW.
Utilizing the FERC's Traditional Licensing Process, the District
filed the license application with FERC in August, 2008. Throughout the
licensing process, the District has consulted with many federal and
state entities including: Native tribes in Washington and Canada; the
Department of Interior's Bureau of Land Management (BLM, the underlying
landowner); National Oceanic and Atmospheric Administration Fisheries
(NOAA Fisheries) and the Fish and Wildlife Service (under Section 7 of
the Endangered Species Act); U.S. Army Corps of Engineers (under
Section 404 of the Clean Water Act); Washington State Department of
Ecology (Ecology) (under Section 401 of the Clean Water Act and state
law); Washington Department of Fish and Wildlife; Washington Department
of Natural Resources; Washington State Historic Preservation Office
(under Section 106 of the National Historic Preservation Act); and
Okanogan County.
FERC issued a Final Environmental Assessment (EA) under the
National Environmental Policy Act (NEPA) on August 31, 2011. The Final
Programmatic Agreement under the National Historic Preservation Act was
issued on January 30, 2012. The District and Ecology continued efforts
to complete a Clean Water Act Section 401 water quality certification.
On February 24, 2012, Ecology published a draft 401 certificate with a
30 day comment period. Ecology is reviewing and responding to comments
in anticipation of issuing Final 401 Water Quality Certification. The
District expects a FERC license after finalization of the Section 401
Water Quality Certification and the issuance of a Biological Opinion by
NOAA Fisheries. After issuance of the FERC license, the District will
need to finalize the right-of-way (ROW) authorization with the BLM,
which is required under the Federal Land Policy and Management Act
(FLPMA).
Enloe as a Source of Green, Renewable Power
Located at an existing dam and reservoir and operating on a run-of-
river basis with virtually no measurable effects on the hydrologic
regime of the Similkameen River, the Enloe Project will be a model of
green, carbon-free hydropower design and operation. The Protection,
Mitigation, and Enhancement Measures (PM&E's) identified in the Enloe
License Application together with the mitigation measures identified in
FERC's EA under NEPA will meet or exceed the scientific principles and
technical requirements generally specified for ``green hydro''
certification. Leading environmental organizations have identified six
key goals which provide a reasonable determination of whether a
hydropower facility has low impacts on the environment. These concern
fish populations, river flow, water quality, flooding of wildlife
habitats, cultural resources and recreation. They have also established
objective criteria to address these six goals. Internationally,
European and Canadian criteria for green hydro include such
considerations as: minimum flow regulations; hydro operations (e.g.,
peaking); reservoir management; bedload management; power plant design;
hydrological character; connectivity of river systems; sediment budget
and geomorphology; and landscape and biotypes. By all such measures and
criteria, the Enloe Project would strongly qualify as an appropriate,
green hydro project.
The Enloe Project is located above Similkameen Falls, a barrier to
anadromous fish passage, and above critical habitat designated by the
NOAA Fisheries. It incorporates a significant package of beneficial
measures to enhance and protect downstream fish. The District has
agreed to provide fisheries and aesthetic flows required by Ecology to
protect aesthetic and instream values, as will be embodied in the 401
Water Quality Certification in final preparation by Washington State.
When licensed, the District will spend approximately $2.4 million
of the total estimated project cost of $30.9 million on construction
and implementation of the PM&E's over 40 years, a significant portion
of which will employ local community professional services, vendors and
contractors. These ``ecological investments'' to protect, mitigate and
enhance the physical and human environment of the Enloe Project are
equivalent to those widely required for ``green hydro certification.''
They include:
Enhancement of fish habit far exceeding the minimal
fisheries impacts of the Project. A cold water spawning and
rearing refuge will be built out of an existing side channel,
15,000 cubic yards of spawning gravels will be added to the
gravel-poor Similkameen River, and large woody debris will be
transported beyond the existing dam, among other things.
A comprehensive vegetation and wetland management
program, providing restoration, mitigation, and monitoring.
Protection of water temperature, dissolved oxygen,
total dissolved gas, and other water temperature parameters.
Recreation amenities that greatly exceed the
measurable effects of the project, including substantial access
improvements and interpretation.
Protection of local wildlife through project design
and construction as well as construction of enhancements to
benefit bald eagles.
The Development of the Enloe Project is Consistent with National Policy
The Enloe Project has been developed consistent with the recent
interest in adding hydropower development to existing dams. Currently,
only 3 percent of the nation's 80,000 dams generate electricity.\1\ A
study by the Department of Energy, National Oak Ridge Laboratory
estimated that approximately 12.6 GW of new, renewable power can be
generated at existing dam sites.\2\ This study also found that a
majority of these sites can be developed on federal land, not
disturbing tribal sites, critical habitat, or national parks and
wilderness areas.
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\1\ National Hydropower Association, http://hydro.org/tech-and-
policy/developing-hydro/powering-existing-dams/.
\2\ National Hydropower Association, http://hydro.org/wp-content/
uploads/2011/04/ORNL-Hydro-Factsheet-final.pdf
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A Memorandum of Understanding (MOU) was signed on March 24, 2010
between the Department of the Interior (DOI), the Department of Energy
(DOE) and the Department of Army, implemented through the U.S. Army
Corps of Engineers (USACE). The purpose of the MOU is to develop
reliable, affordable, and environmentally sustainable hydropower by
building a long-term working relationship, prioritizing similar goals,
and aligning ongoing and future renewable energy development efforts
between DOE, DOI, and USACE. In its 2-year progress report, DOE, DOI
and USACE stated that one of the goals of the MOU was to investigate
the facilitation of the permitting process for federal and non-federal
hydropower generation.
Benefits of the Enloe Project to Washington State
The District believes that hydropower is a clean renewable resource
with significant untapped job-creating and environmental benefits, and
potential for expansion that should be strongly encouraged by Congress.
Specifically, the 2010 American Recovery and Reinvestment Act stimulus
package included a $6 million allotment to train low-income, Veteran,
and disabled workers in Washington State to perform energy-efficient
construction jobs.\3\ The Enloe Project is an example of a construction
project that could use these skilled ``green'' workers and create other
economic benefits in the area. In April-May 2012, the unemployment rate
in Washington State was 8.3%,\4\ and specifically it was 10.2% in
Okanogan County.\5\ The Enloe Project is projected to employ at least
20-25 percent of the personnel needed for the construction of the
project from the local impacted area. In addition, the remainder of the
construction personnel would temporarily relocate to the construction
area, benefiting local businesses, retail and housing providers during
the length of construction and compliance.
---------------------------------------------------------------------------
\3\ http://seattletimes.nwsource.com/html/localnews/
2010846442_recoveryjobs21m.html.
\4\ http://www.bls.gov/lau/.
\5\ https://fortress.wa.gov/esd/employmentdata/eeis-tools/labor-
area-summaries.
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The Enloe Project is expected to generate an average of 45.0 GWh
annually, and the total value of the power produced by the Enloe
Project is estimated to be $2.6 million annually. This generation and
revenue represent a source of clean, renewable and sustainable
hydropower that will be used by and benefit the residents of Okanogan
County. Overall, the District's power portfolio is based on 88 percent
hydropower (from other sources), with the remainder being wind, nuclear
and a small amount of other energy sources. To meet increased demand
for power, if unable to develop the project due to the cost of
requirements placed on it by federal agencies, the District would be
forced to forego the local economic and environmental benefits of this
green generation and obtain the replacement power from natural gas or
coal fired generation.
Issues with BLM's Authority to Issue Mandatory Conditions in its ROW
Developing the Enloe Project with the PM&E's proposed in the
license application (which are based on extensive consultation with
most federal and state resource agencies, as well as the additional
measures recommended by FERC in the Final EA), would represent an
environmentally beneficial and economically viable project. However,
the prospect of further mandatory enhancement measures poses a
potential jeopardy that could destroy the economic viability of the
project. Notwithstanding the positive project attributes of the Enloe
Project and outcomes of the FERC NEPA process, the BLM has proposed
further onerous environmental recommendations in the FERC licensing
process which are unnecessary and unjustified. These recommendations
would accomplish BLM programs and objectives that are not directly
related to project impacts. Enloe is a very small project, with a total
budget of approximately $30.9 million (of which about $2.4 million is
committed to environmental mitigation). BLM's program would increase
total project cost by 20 percent.
BLM's recommendations would not only raise the cost of the PM&E's
from $2.4 million to an estimated $8.7 million, but also would expose
the District to future open-ended cost increases because BLM's
requirements would reserve to BLM the discretion to increase
requirements and costs still further in the future. BLM's modified
recommendations all go well beyond the level of mitigation considered
sufficient by FERC in its EA; they are therefore unnecessary to
mitigate project impacts, and lack any objective justification. It is
also important to understand that the District's proposed PM&E program,
as enhanced by FERC's mitigation requirements, already offers
significant beneficial enhancements of the human and physical
environments, beyond the mere mitigation of Project effects.
The BLM's many additional recommendations would restore
recommendations previously considered and rejected by FERC in its EA.
FERC received these recommendations from BLM at least twice, explicitly
considered each of them in its EA, and rejected them. Although BLM has
declined to formally impose these requirements as mandatory conditions
under Section 4(e) of the Federal Power Act (FPA), BLM has stated that
it plans to achieve the same result by unilaterally imposing these
recommendations as requirements of its ROW, regardless of FERC's
considered opinion. This approach to the license and ROW conditions
disregards and subverts the purpose of the FERC licensing process.
These BLM unjustified and unnecessary recommendations include
requirements that the District:
Spend an amount equivalent to nearly 80 percent of
the entire existing mitigation program to move spoils primarily
composed of native rock off site.
Be responsible for a program of recreation
improvements that has no relationship to project impacts or
needs, and would triple the District's recreation mitigation
cost.
Rebuild an expensive footbridge that FERC concluded
was not necessary due to the lack of public facilities and
recreation opportunities (existing or proposed) on the west
side of the river.
Conduct studies leading toward aesthetic flows that
BLM would set itself, ignoring flow agreements that have been
negotiated through the Washington State 401 Water Quality
Certification process, and exposing the project to an open-
ended financial risk.
Comply with more extensive vegetation management
requirements than BLM has imposed on any other project of which
we are aware, potentially increasing mitigation costs for these
resources by more than 150 percent.
Increase fisheries mitigation to 150 percent of the
planned program to address impacts unrelated to the project,
ignoring the extensive and well-supported fisheries mitigation
program negotiated with agencies and Tribes that already fully
mitigates impacts.
Any process that allows a federal resource or land management
agency to unilaterally impose its ``wish list'' of PM&E's on a project
without regard to actual project impacts and the economic feasibility
of such conditions on the project represents an invitation to
arbitrary, project-crippling requirements. What is required is a
process that requires or at least encourages federal resource or land
management agencies to participate in developing a consensus of
interested federal and state agencies with respect to what constitutes
a reasonable level of project-related PM&E's. Parceling out unilateral
authority to impose PM&E requirements on a project--as is currently the
case with mandatory conditioning authority under FPA Section 4(e) and
independent conditioning authority exercised by federal land management
agencies under FLPMA--is potentially disastrous, saddling such projects
with needless costs or, in too many cases, thwarting needed development
altogether.
Conclusion
The District is hopeful that BLM may yet reconsider its intent to
overreach with these excessive license and ROW conditions and thereby
preserve the economic viability of our proposed beneficial green
hydropower project. We applaud the Committee for looking into the
impact of federal resource agencies' mandatory conditioning authority
on the economics of projects such as the Enloe Project. In closing, I
would like to thank the Committee for this opportunity to speak today
and address the very important and potentially project-crippling
requirements posed upon the District in its pursuit of licensing a
clean renewable power project. The District looks forward to working
cooperatively with the Committee as it moves forward with its
assessment of federal natural resource agency conditioning authority. I
will be happy to answer any questions.
______
The Chairman. Thank you, Mr. Grubich, for your testimony.
We will now begin the question period for Members, and I will
recognize myself for five minutes.
Mr. Grubich, let me follow up with what you said. And this
is the time line that I understand. On August 8, 2011, it was
after FERC had issued its draft environmental assessment, after
that for the Enloe Dam. That is when the Secretary of the
Interior, through BLM, filed their 36 pages of recommendations
for the right of way. Now, this is just the right of way, it
has nothing to do with the physical aspect of the dam. Is that
correct?
Mr. Grubich. That is correct.
The Chairman. OK. Now, why--I guess I am--where I am
puzzled is why would an Interior Department need to conduct
additional NEPA review when the FERC process went through a
NEPA review.
Mr. Grubich. That is an excellent question, and that is one
we have posed to the agency.
The Chairman. And they have said what?
Mr. Grubich. They have not articulated the reason why at
this point.
And to be fair, Mr. Chairman, we are in dialogue with the
agency, trying to resolve this. My concern is that the
timeliness of the resolution is of the utmost importance before
our board makes the decision to go forward with the project or
not.
If you look, BLM has 45 acres of land around this land, 45
acres of land. And yet they want to impose an additional $6
million of project costs that have nothing to do with this
project, based on FERC's analysis.
The Chairman. Let me ask. Going through this process with
FERC, you obviously had to have a lot of stakeholders involved
with that. Give me an idea of what the stakeholders and--what
consensus that they came through in the FERC process.
Mr. Grubich. And we had all the stakeholders, including
BLM, in the process, although BLM is the only one who didn't
support the outcome of the process. We had the Colville Indian
Tribe, we had the Lower and Upper Similkameen Band from Canada
supporting the project. We had the Washington State Department
of Ecology, the Washington Fisheries, all of the Federal
agencies involved in the FERC process. And when FERC came out
with their final EA, BLM at that point chose to take exception
to FERC's evaluation of their recommendations.
The Chairman. Well, that kind of leads in to another
observation. Mr. Reardon just testified prior to your testimony
that the status quo works when you have a collaboratory
process. And you just--I don't want to put words in your mouth,
so confirm that I said this correctly--you said that all the
stakeholders, with the exception of BLM, was pretty much in
agreement with the project.
And so, I had made an observation in my opening statement
that it appears some agencies step in for a second bite. Is
that an accurate assessment of what you are doing? In other
words, the project itself, the Enloe project itself, going
through FERC, there is broad consensus with the exception of
one agency. Now this agency, because it doesn't agree with it,
is imposing different requirements totally unrelated to energy
production. Is that a fair assessment of what is going on?
Mr. Grubich. Yes, that is a fair assessment. And second
bite of the apple is a very appropriate illustration.
It is frustrating, from a small utility's perspective, to
go through this process and believe that you have the
boundaries of the project done, and then have one agency hold
the hammer over your head as to can you go forward with the
project. And I can tell you, from a financing standpoint, that
is my biggest concern. Not only are our local officials going
to have to make a decision potentially without full knowledge,
but when we go to finance a project, the construction risk
component adds either cost to the project or interest to the
project or to the bonds. That is another huge concern that I
have when it comes time to package this and go forward with the
project.
The Chairman. Now, just briefly, put that in perspective.
What did you say your revenues are, roughly, a year?
Mr. Grubich. A little over $40 million.
The Chairman. A little over $40 million. And this project
could cost in upwards of over 30, three-quarters of your total
revenues for 1 year.
Mr. Grubich. Well, it is estimated at $31 million right
now, which is about equal to our retail sales. And then any
additions are going to be at least as much as our total annual
sales.
The Chairman. Well, Mr. Grubich, thank you very much. I was
made aware of this some time ago, and I have to say I shook my
head when I heard what you said, because this is totally
unrelated to power production. It is simply ancillary, and it--
I very much appreciate your testimony.
My time has obviously expired. I recognize the gentlelady
from California.
Mrs. Napolitano. Thank you, Mr. Chairman. And, Mr. Reardon,
with a simple yes or no, do any of the Federal agencies have
the authority to tell FERC they cannot construct a license
project?
Mr. Reardon. No. Sorry. No.
Mrs. Napolitano. Thank you. In Mr. Robinson's testimony it
states mandatory conditions have taken a toll on hydropower
development, sending a market signal that it is bad business to
pursue new hydropower projects. Yet in testimony from FERC
Commissioner Phil Moeller, he estimates that pending hydropower
license applications propose almost 2,500 additional megawatts
of new capacity, and applications for another 5,580 megawatts
expected to be filed in the next 5 years. Sound like an
industry that is deterred by environmental conditions?
Mr. Reardon. No, and I just add that what we see is a
number of existing projects looking at incremental increases in
generation on both of the big basins I have worked in, the
Penobscot and the Kennebec.
Mrs. Napolitano. Developers are not doing it for the
benefit of environment. They are going to make money out of it.
Would they pursue projects or proposals if they did not make
economic sense?
Mr. Reardon. I assume not.
Mrs. Napolitano. I would hope not. In Mr. Maisch's
testimony, he states the resource agencies can impose mandatory
conditions that result in substantial loss of hydropower
generation, require costly infrastructure modifications, and
increase O&M costs. There are other costs associated with
hydropower that are borne by other users of the river, whether
it is the fishermen, downstream water users, everybody who
benefits from the healthy ecosystems. These costs come in the
form of fewer fish, less and lower water quality, and fewer
recreational opportunities. Doesn't a true balancing of
interests require that, one, getting the benefit from altering
a natural river environment should have to pay the cost of
degrading it?
Mr. Reardon. Yes. And I think the example on the Kennebec
is a great one. You know, those fish runs were destroyed by a
dam that was built when there was no fish passage authority,
and not restored until after ECPA and fish passage authority
went to the Federal agencies.
Mrs. Napolitano. So there is a cost borne by others that is
not always----
Mr. Reardon. There certainly is.
Mrs. Napolitano. Thank you. Mr. Maisch, your testimony
indicates that your agency expects to lose about five percent
of the annual energy generation as a result of increased in-
stream flow requirements, and will spend approximately 20
million on capital improvements, with an increase in O&M costs
of 2.4 million per year, an impressive amount. But did your
agency recoup its initial investment in the project over the
prior license term?
Mr. Maisch. Well, our agency was in a partnership project
with Pacific Gas and Electric Company, so they got all of the
energy and paid all of the operation and maintenance costs and
the bond indebtedness. So we have received the full benefit of
all of the water supply. And so, yes, there have been benefits
over the 50-year license, no doubt at all.
Mrs. Napolitano. Well, then, in the same token, what is
your estimate with the net revenue from the project's power
generation and the water delivery over the next 30 to 50 years,
when the license period--time where these new investments in
the project will give your agency the exclusive right to use
this public waterway to generate hydroelectricity?
Mr. Maisch. Yes. We expect the project to produce in the
neighborhood of $45 million a year in energy benefits.
Mrs. Napolitano. Forty-five. Thank you very much.
And, Mr. Reardon, just a question for Maine. How many
Mainers went dark with the removal of the Fort Halifax Dam and
the Edwards Dam?
Mr. Reardon. None.
Mrs. Napolitano. Any consumers will lose access to power
with the decommission of the Great Works Dam and the Veazie
Dam?
Mr. Reardon. No. And, in fact, one of the elements of that
project is that the energy enhancements started being
implemented before the dam removals, which haven't occurred
yet.
Mrs. Napolitano. I see. Mr. Robinson, you say hydropower is
in trouble. And just--my common sense tells me that those that
do hydropower would normally have their ducks set up when they
go for licensing, or at least they should. And it is an unlevel
playing field. I have visited a couple of the PMAs, and first
time I think anybody has really gone and talked to them. And I
am wondering. Why have they not been vocal, if there have been
issues?
And I can certainly see that what they charge for the
electricity does not take care of the infrastructure issue.
Mr. Robinson. Yes. I think one of the reasons our--FERC's
licensees and applicants are not vocal in this, and they have
some difficulty in expressing their concerns, is that they know
that they are going to have to work with these agencies, and
they know that the playing field is not level, and they will be
the recipient of those mandatory conditions. And so they do
their best. And I feel for them. They do their best to try to
work within the system that Congress has laid out for them and
that FERC regulates to get an equitable decision.
Unfortunately, with regularity, they do not get that
equitable decision out of the resource agencies, and they get
mandatory decisions that are not consistent with where even the
Commission has found the public interest.
Mrs. Napolitano. Thank you, Mr. Chairman, for your
indulgence.
The Chairman. The time of the gentlelady has expired. The
Chair recognizes the gentlelady from South Dakota, Mrs. Noem.
Mrs. Noem. Thank you, Mr. Chairman. My question would be
for Mr. Robinson. We have heard testimony today and some of the
conversation that we have already had that FERC may have its
own set of guidelines that it follows, while the resource
agencies have another set of requirements or rules all
together.
So, FERC has to look at hydropower re-licensing in a multi-
dimensional manner, where some of these resource agencies may
look at them one dimensionally, through environmental
protection rules without taking into consideration costs or
benefits. And so, I was curious if in your evaluation of this,
does Federal law create this conflict, and create these two
different sets of rules that are looked at by the agencies and
FERC?
Mr. Robinson. Well, in my history at FERC--and I started in
1978 and was there through 2009--originally it was not a
problem, because FERC interpreted the 4(e) conditions and the
section 18 conditions as basically advisory. But through a
number of court decisions that occurred starting in about 1983,
I think, with Escondido, those conditions were made mandatory
without FERC having any ability to modify or consider those
conditions.
What that did for the process--and we had hydropower
development through the 1980s. We had as many as 500
applications per year for new projects--not the kind of
projects that we were hearing about here a minute ago--new
projects on rivers prior to 1983. But what happened then was it
became apparent that the Commission could not move forward
without an agency deciding whether or not elk habitat was
critically important for their purposes, and imposing those
conditions on a hydropower project that had no relationship to
elk habitat.
That started sort of the unfolding of the hydropower
program, and it has just continued through the years, to the
point now where we essentially, for decades have had no net
development of hydropower in this country, while other forms of
generation have continued to grow. Nothing has happened since
2001, when the Commission staff recommended to Congress that we
had a problem. Those problems are just as significant today as
they were over a decade ago, and we still do not continue to
develop the hydropower potential of this country.
Mrs. Noem. So what would your recommendation be?
Mr. Robinson. Pure and simple. Those conditions--the
distributed decision-making process, or dispersed decision-
making process, has to have the discipline of an agency that is
vested with the authority and the responsibility and reviewable
by the courts to exercise the laws--the Endangered Species Act
and others--and make decisions across the spectrum of issues on
what is in the public interest.
That does not happen now. It happens in the natural gas
industry. The six principles I mentioned earlier are all
evident in the natural gas industry. That is why we put 1,500
miles of natural gas pipeline in the ground every year. The
equivalent of that on hydro just doesn't exist. They only have
two of the six principles covered, and nothing can get done.
Mrs. Noem. Mr. Maisch, would you like to weigh in on this
topic, and your experience that you have had through the
process?
Mr. Maisch. Yes. Thank you very much. The--I agree with Mr.
Robinson whole-heartedly. The resource agencies don't have the
responsibility to balance across diverse interests. And it
makes total sense. I mean the resource agencies have their
narrow view of resources that they are charged with protecting.
And that is their only view of the world. And the fact that
reducing hydro means we can't have as much wind or solar
generation added to the--you know, just is not in their
purview. And they are not capable, I don't think, of balancing
across those lines. And you need someone like FERC, who has a
central decision-making authority that can take into account a
diverse environmental as well as economic interests, and make a
final decision. And we don't have that.
Mrs. Noem. So what do you believe would be the best method
of reconciliation between the resource agencies and FERC to
come to that decision? Do you believe that FERC needs to have
that ability to move forward?
Mr. Maisch. I think that that would be the simplest and
best solution, yes.
Mrs. Noem. OK, thank you. Mr. Chairman, I yield back.
The Chairman. Would the gentlelady yield to me? Would the
gentlelady yield to me----
Mrs. Noem. Certainly.
The Chairman [continuing]. For the balance of time?
Mrs. Noem. Certainly.
The Chairman. I just want to ask a question here. Mr.--and
to Mr. Robinson is this question.
Mr. Reardon said that--in his testimony, that there is only
a small loss of hydropower. And yet Mr. Maisch testified that
one facility in California loses 10 percent. My question to you
is are there examples where this conditioning could cause a dam
to be removed?
Mr. Robinson. Yes. I mentioned one earlier, with the
Klamath project in California. There the section 18
prescription is estimated to cost somewhere on the order of
$200 million. And that, of course, moved that applicant into a
position of saying, ``What can we do to get out from under that
burden?'' And that is dam removal. I can't remember exactly,
but I think it is over 100 megawatts that is represented by
that 1 project.
The Chairman. Right. I think Mr. McClintock knows all the
figures on that.
Mr. Robinson. Yes.
The Chairman. I would just say--I would just make this
observation--and I thank the gentlelady for yielding--that
equates 100 percent loss of power.
Mr. Robinson. It does.
The Chairman. Yes.
Mr. Robinson. And you can find examples on either side. But
the overall statistics on hydropower is that it has been
stagnant for more than a decade----
The Chairman. Right.
Mr. Robinson [continuing]. While other generation sources
continue to grow.
The Chairman. My time has expired. The Chair recognizes the
gentleman from California, Mr. Garamendi.
Mr. Garamendi. Thank you, Mr. Chairman. And thank you for
the hearing. Very, very important issues to be discussed here.
And it is going to take us some time to get through all of
this, probably multiple hearings.
Just a couple of things. Most of the witnesses have made
recommendations about how to move things forward. Among those
are streamlining the processes and, I understand, giving one
agency authority. I think this was, Mr. Robinson, one of your
recommendations. Could you expand on that for, like, maybe 30
or 40 seconds, and try to tell us what--how you would--who that
would be?
Mr. Robinson. I will try real hard. I have been through
four iterations of trying to modify the regulations at FERC to
make things quicker, more efficient, the whole bit. What I have
concluded--and I was responsible for the last iteration, the
ILP, that was----
Mr. Garamendi. I understand.
Mr. Robinson [continuing]. My responsibility. I take full
blame for it. What happens is the more we try to make it--
recognizing the disperse decision-making process and make it
more efficient, the more opportunities we have given people
over time to leverage that process to get what they want with a
singularity of focus. As long as that exists, then the first
dollar for infrastructure development is not going to be spent.
Developers are going to go in and look at that process and
say, ``I can put my money somewhere else and have a better
chance of return on it,'' and that is why you have a stagnant
hydropower program. You need to have an agency who can guide
the process, and has the ultimate control responsibility
authority for making the decision. Is it in the public
interest? And then they have to defend that decision, as well.
Right now, there is just too many cooks in the kitchen.
Mr. Garamendi. So who should that agency be?
Mr. Robinson. Well, I have a bias there, because I worked
for FERC for 31 years, and I think we were very capable of
doing that. We have--they have, I'm sorry--they have the
expertise, the knowledge, the resources. They know hydro and
they know the resources. What the----
Mr. Garamendi. OK, so you--so, for example, NMFS would
provide information to FERC, and then FERC would use that
information and make a decision.
Mr. Robinson. They can provide the mandatory conditions to
FERC, but FERC has to have the ability to look at those
conditions and say that ``They are mandatory as long as they
are consistent with our determination of the public interest.''
It wouldn't be a matter of FERC just not looking at the
conditions.
Mr. Garamendi. OK. So what it basically does is it takes
the resource agency's authority, transfer it over to FERC. FERC
then has the dual responsibilities--that is, the environmental
as well as the development responsibilities--and would have to
find the common ground.
Mr. Robinson. They have that right now.
Mr. Garamendi. I understand. But the resource agencies do
not. They have----
Mr. Robinson. The resource agencies do not. They have the
responsibility--there are provisions in EPAC 2005 which tried
to impose the overall look onto the agencies. Basically it is
the fox in the chicken coop.
Mr. Garamendi. OK. That is very helpful, thank you. Also, I
think your testimony picked up the issue of eminent domain. And
that would be the Federal Government using its eminent domain
power to provide acquisition of private property for a private
developer to develop a hydro project.
Mr. Robinson. That is correct. And, in fact, of the six
principles, that is the last principle for successfully
building energy infrastructure. That is one of the two of the
six principles that hydro already has, and has had since 1920.
They have the eminent domain authority under the Federal--I
can't remember the name of it now, but it was enacted in 1920.
Mr. Garamendi. As I think we know, eminent domain----
Mr. Robinson. Yes.
Mr. Garamendi [continuing]. Using eminent domain for the
purposes of a private party has been rather controversial in
recent years.
Mr. Robinson. And that is why the Commission historically
has done everything they can to try to not impose that. But
it--the natural gas industry has that as well, the eminent
domain authority.
Mr. Garamendi. Well, obviously, that will become a
controversial issue.
Mr. Robinson. It has been.
Mr. Garamendi. Fifty-one seconds. Many reasons why new
projects have not gone forward, the licensing is one of them.
There are also opportunity--geographic opportunity issues. Run-
of-the-river projects are being proposed. Is there any
specific--major dams is a big issue, I understand that. But
run-of-the-river is another area. In that realm, what kind of
problems may exist?
And I think I will ask the rest of the crew here to answer,
and--well, I will just let the question hang. Thank you very
much, Mr. Chairman.
The Chairman. Well, you can always ask that question in
writing and get a response. We would all like to hear that. And
if the gentleman wants to follow up, he certainly can.
Mr. Garamendi. Or if somebody else could ask the question
and get a response.
The Chairman. The Chair recognizes the gentleman from South
Carolina, Mr. Duncan.
Mr. Duncan of South Carolina. Well, thank you, Mr.
Chairman. You know, it baffles me that when we can grant
licenses for 30 or 50 years, but--we have a long track record
with the countries that are running these hydroelectric
projects, but then we require something that is so complex,
expensive, and lengthy in the re-licensing process.
You have a track record. You know what has been going on
for the last 30 or 50 years. And so this is an important issue.
The re-licensing process, in my opinion, takes far too long,
especially when you have a wide agreement among environmental
and industrial stakeholders and state resource agencies.
And I will give you an example. That is the Catawba-Wateree
Project in North Carolina managed by Duke Power. They had the
North Carolina Department of Natural Resources and a wide
variety of other agencies on board with them and in agreement,
and it still took way too long, and it cost the rate payers way
too much money. I have talked about this a number of occasions
in here. This project is a project where the applicants sought
to re-license a facility well before its license expired. It
took significant steps prior to filing its re-licensing
application to gain the support from over 69 stakeholders.
When it filed with FERC, the process was continually
delayed because the National Marine Fisheries Service, they
would not engage in the process. In fact, FERC asked them to
initiate a formal consultation back in 2009, and was rebuffed.
FERC then issued a final Environmental Impact Statement for the
project and asked for Marine Fisheries to issue a biological
opinion for the project by the end of February 2010. However,
the Marine Fisheries continued to drag the process out and just
recently, within the last two months, issued the draft
biological opinion.
Now, this was about a sturgeon that hadn't been seen in
this part of that river system in over 70 years. Seventy years.
And so, while there seemed to be some good points, there are
also some bad points like the excessive sturgeon monitoring
requirements and adaptive management provisions for the whole
term of the new license. Adaptive management is especially
troublesome, since it would allow the Marine Fisheries to
change the applicants' hydro operations as frequently as every
year, asking for increased flow releases from the Wateree hydro
station, and upsetting the water use balance achieved by the
stakeholders.
Now, I am going to take that and I am going to think about
the Savannah River basin and Lake Hartwell and what not FERC is
doing, but the Corps of Engineers is doing with downstream
flows for sturgeon when current flows, which are, I think,
excessive, put more water in the river than was in the river
before the lakes were ever built, all because of a sturgeon
downstream.
So, what is additionally troubling, and something Marine
Fisheries did not take into account is that upsetting the
stakeholder agreement can void the basis for the South Carolina
vs. North Carolina Supreme Court case settlement agreement
regarding water appropriations or apportionment rights, inter-
basin transfers, and everything that is going on there.
So, in response to some of the suggestions by Marine
Fisheries in the draft biological opinion, the applicant has
offered an alternative monitoring program that is much more
reasonable and does not include adaptive management. Hopefully
this is something that Marine Fisheries will appreciate,
pursue, and act on expeditiously. It is just another cog in the
wheel that creates a system and a process that is too expensive
for the rate payers and the companies, and it is too lengthy.
So, Mr. Robinson, I ask you this. In your testimony you
talked about the excessive delays by these coordinating
agencies. What would you think if the coordinating agencies
like Marine Fisheries were given a drop-dead date, a definitive
time frame on which to act, and if they didn't, then they are
out of the picture, they have had their opportunity? What would
you think about that?
Mr. Robinson. I would say that you just named the third
principle of the six principles of effective infrastructure
development, a disciplined schedule. If you don't have the
ability, if that agency with authority does not have the
ability to discipline the schedule that is set in consultation
with all the agencies, then that increases the leverage for
those resource agencies to extend it, to get more in
negotiations out of their terms and conditions, and hold the
process up.
It also basically eliminates the ability of anybody to come
in and say, ``I want to develop a new project,'' that they
can't stand that indefinite risk. That regulatory uncertainty
stops the investment. So it is something that needs to be
applied to the hydropower licensing process. It is currently
not there.
Mr. Duncan of South Carolina. Yes. I appreciate it. That
was my follow-up question about the uncertainty, and you
touched on that.
I would just end with this, Mr. Chairman. As we have
allowed a number of different groups and agencies to hijack the
whole process with regard to the rivers and lakes and the hydro
projects, which are seen as green energy--their base load 24/7
power supplies that could supplement all this other green
energy that we are pursuing with wind and solar--it is the
right thing to re-license these in a timely fashion. And it is
the right thing to keep costs down for the rate payer and the
companies. And with that, I will yield back.
The Chairman. I appreciate the gentleman, and his time has
expired, and the Chair recognizes the gentleman from
California, Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman. I want to
continue to proceed along the line of questioning that we have
been engaged in today.
But I do want to point out that it is important to note
here we are not only talking about when we look at re-licensing
operations, units that are held privately by utility companies,
but also public utility companies as well, that are held by the
public in trust to provide energy for that public purpose.
Mr. Robinson, with your past experience on FERC, typically
how long would you say a re-licensing--a facility that has been
built, that has been operating for 30, 50 years, whatever,
takes to be re-licensed?
Mr. Robinson. Beyond way too long.
Mr. Costa. ``Way too long'' is defined by what? Four to six
years? That seems to be----
Mr. Robinson. When we put our regs in place in 2005 for the
ILP, the integrated licensing process, which was supposed to
provide discipline, we recognized there that it would be five
to five-and-a-half years to re-license existing projects----
Mr. Costa. OK. Did the rest of you concur with that? Is it
five years, plus or minus, about average?
Mr. Maisch. In our project we started three years before
that. So actually, eight years.
Mr. Costa. So you are eight years at Placer.
Mr. Maisch. Right.
Mr. Costa. And anybody else take issue with that time line?
Mr. Grubich. We are seven years----
Mr. Costa. You are seven years.
Mr. Grubich [continuing]. Today, and we are still----
Mr. Costa. OK.
Mr. Grubich [continuing]. Not in the final license.
Mr. Costa. And, Mr. Reardon, you have a different
perspective?
Mr. Reardon. I have applied for one set of licenses from
FERC, and I think we were two-and-a-half years from application
to receipt.
Mr. Costa. You better give an inside track to these others.
Obviously, you----
Mr. Reardon. The other thing I might say, though, is that
it depends a lot on the project. Complicated----
Mr. Costa. No. Obviously, it does, and that is an average.
But that is my experience, four to six years.
My--it appears under section 18 of the Federal Power Act
that the National Marine Fisheries Service, otherwise known as
NMFS, seems to have absolute, unfettered discretion when it
comes to re-licensing to impose conditions, and that FERC has
no discretion to modify these conditions. Would--Mr. Robinson,
Mr. Maisch, you care to comment quickly?
Mr. Robinson. Yes, quickly, you are correct. But beyond
that, depending upon where you are in the National Marine
Fisheries Service around the country, they will use that
authority and they will leverage that to try to take on larger
agency interests like basin restoration on the back of a single
project.
Mr. Costa. And shouldn't FERC be able to balance the
competing interests on energy supply and water supply, flood
control? I mean to the degree that you draw the process out, to
the degree that you take--I mean these projects are built for
power purposes, but they are--also sometimes provide a flood
control component as well as water supply. And to the degree
that they leverage, as you put it, and now the water is reduced
for the other purposes, but they don't have to pay for those,
it is the rate payers that are paying for that, is that not the
case?
Mr. Maisch. That is exactly the case. You are exactly
right. FERC--excuse me, the National Marine Fisheries Service,
as well as the----
Mr. Costa. If the benefits are so important to the
increased--for the fisheries, it seems to me that it shouldn't
come out of the rate payers that are paying for the increased
benefits.
Mr. Maisch. Well, there is no place else for it to come.
Mr. Costa. Mr. Grubich, you have a comment there?
Mr. Grubich. Yes. When we make our rates, we use a
philosophy called cost-causer/cost-payer, in that the cost
associated with serving a group of customers should be paid by
that group of customers.
It seems to me, in this process, the individual agencies
don't adhere to that same philosophy. If the project drives the
cost, the project should pay for the cost. But if the agencies
want ancillary benefits out of that project, it shouldn't come
out of the cost of the project, and it shouldn't----
Mr. Costa. No, I concur. And we even have some projects
that I am familiar with in which, on flow requirements that
they have leveraged, or attempted to leverage, that they are--
by their own admission, has been a case where anadromous fish
have not--never, may never, ever existed in the waterways.
But----
Mr. Grubich. Case in point is Enloe Dam.
Mr. Costa. In where?
Mr. Grubich. Enloe Dam, the project that we are licensing.
Mr. Costa. Well, same thing in the Tuolumne River.
Mr. Grubich. Right.
Mr. Costa. And--but they don't care, because they have the
leverage. And under section 18 under the Federal Power Act,
they use it.
So, it seems to me that balance has to be achieved here. We
even have a more difficult circumstance--and my time has
expired--where hydropower in California, under the Renewable
Energy Act, is not included or counted as renewable, which is
beyond my comprehension.
But, nonetheless, Mr. Chairman, I think this is an area
that we need to continue to try to refine, and see if there is
something that we can do to make some sense out of this.
Because these are projects that were built for the purpose of
providing public power for the people in this country. And the
re-licensing is critical to continue that effort. And being
held up at the pass, so to speak, because there is an
opportunity for re-licensing, when the whole financial
structure for these projects was based upon a certain amount of
power being able to be generated based upon water supply and
flood control, and now you change the equation with no cost--
with rate payers having to pay all the cost, is unfair and
inappropriate, I think.
The Chairman. The time of the gentleman has expired. The
Chair recognizes the gentleman from Pennsylvania, Mr. Thompson.
Mr. Thompson. Thank you, Chairman, and thanks for having
this hearing, as well. I associate myself with my good friend
from California and his comments. I had the opportunity just a
matter of weeks ago to visit a hydropower generation plant that
was built and attached to a flood control dam that was built,
and was very, very impressed, actually. We are talking about
clean, affordable energy, kind of a win-win for everyone.
Obviously, the dam has, without a doubt, has saved
countless lives and property over the decades that it has been
there. And the power plant is generating electricity that is--
it is operated, owned and operated, by a rural electric
cooperative. It is just one part of their portfolio for
producing energy. But, you know, I think because of smart
decisions like that, I believe that their energy costs are
among the lowest rates in the State of Pennsylvania.
And, frankly, I am a sportsman. And I was very impressed
with, frankly, how--this plant and how they operate, the
partnership that they have, the fishing. And some of the
fishing facilities, actually, that this company, this
organization has provided, just very, very positive.
Mr. Robinson, the Federal Energy--FERC--Regulatory
Commission once suggested that a one-stop shop would be set up
to--should be set up to re-license non-Federal hydropower
projects. You know, I happen to believe that the bureaucracy
created with the current silo process is tremendous and,
frankly, serves to drive up costs. And that is cost that is
borne on the backs of those who purchase the electricity, in
the end. And, you know, I think all of our goal--at least my
goal, obviously, and I know many of the folks I work with are
dedicated to affordable and reliable energy, and hydro does
that.
You also--you referenced that FERC be given exclusive
authority to site projects, and that there should be one
Federal record on each project. Would this undermine the
environmental protections? And is there a precedent?
Mr. Robinson. No, I don't believe it would undermine the
environmental protections. Where an agency has exclusive
authority--and that does exist in other generation sources--
that agency is still responsible for all the laws that are
there to protect the environment. And they have to coordinate
and cooperate with the resource agencies on what they believe
is important under the Endangered Species Act and others.
So, even though you say ``exclusive''--or I say ``exclusive
authority,'' it doesn't mean that somebody has dictatorial
authority. It just means there is a recognition that one agency
is called on to make the public interest determination after
gathering all the information from everybody else and deciding
is this in the public interest or not, and how should it be
constructured.
Mr. Thompson. So, in other words, in your opinion, this
would truly increase efficiency, not skip any steps, but
improve efficiency in determining the cost benefits of the
proposed project.
Mr. Robinson. Absolutely.
Mr. Thompson. Right. In April of 2012, the Department of
Energy issued a report showing that the U.S. has 12 gigawatts
of untapped hydropower potential in existing dams that are not
currently producing power. In addition, there are other
locations that may have potential for dam or run-of-river
development.
What single regulatory change--and I will open this up to
the panel--do you think would have the largest impact when it
comes to developing this potential? And we will start with Mr.
Robinson.
Mr. Robinson. Just quickly, having that agency that has the
authority to make the decision.
Mr. Thompson. That lead----
Mr. Robinson. Right.
Mr. Thompson [continuing]. Lead agency with--OK, thank you.
Mr. Maisch. I would concur. The problem that you have now
is that you can't get on the record what it is the resource
agencies are trying to accomplish with their mandatory
conditions. You have to try to second-guess it, and you don't
get a final answer. Or at least it is very difficult to get a
final answer. And streamlining that would be the secret to
achieving the means--the ends you are talking about.
Mr. Thompson. Now, I have to assume, with all these--what I
would call the silo approach that we have now, you almost have
to feel like a ping pong ball getting bounced back and forth
between agencies that probably don't communicate real well
together.
Mr. Maisch. Well, no. Actually, the resource agencies have
done a good job of coming together and presenting a united
front. That doesn't seem to be the problem. The problem is that
you have no leverage in the situation. You can try to cajole,
you can try to persuade, you can provide science. But in the
end, the resource agencies get to make the final decision,
regardless of what you present.
Mr. Thompson. Thank you. It looks like my time has expired.
But if there is an opportunity to get some input from you two
gentlemen, either in writing or after the hearing, I look
forward to doing that.
So thank you, Chairman.
The Chairman. Well, if either one want to answer very
briefly----
Mr. Thompson. Thank you.
The Chairman [continuing]. We have gone over on others. So,
real quickly, I think that question is--should be answered by
all.
Mr. Reardon. I don't have anything to add, except that in
Maine I think those opportunities are mostly very small dams,
and I don't think the obstacles are regulatory.
Mr. Grubich. There is nothing I would add to Mr.
Robinson's. I believe a centralized system makes most sense.
Mr. Thompson. Great. Thank you, gentlemen. Thank you,
Chairman.
The Chairman. I thank the gentleman from Pennsylvania. And
the Chair recognizes the gentleman from California, Mr.
McClintock.
Mr. McClintock. Thank you, Mr. Chairman. About 15 years ago
I asked the California Energy Commission for its estimate of
the cost of various sources of power for electricity
generation. They came back with a report that indicated that
hydropower was the very cheapest form of electricity that we
had. They were estimating at the time about a half-a-cent a
kilowatt hour. At a half-a-cent a kilowatt hour, an average
household's electricity bill would come to about $30 a year.
That was operations and maintenance and amortized capital. But
now we are told that hydroelectricity is just too expensive.
Mr. Robinson, to what extent is Government to blame for
that increase in the cost of hydroelectricity?
Mr. Robinson. Well, I think, if I remember correctly, back
when we did a study in the early 2000s we looked at something
like 30 percent of all the costs associated with a re-license
that went to the benefit of the environment were incurred as
just the application costs.
Mr. McClintock. Just the application cost. But that
doesn't----
Mr. Robinson. Just the application cost----
Mr. McClintock [continuing]. Include all of the capital
costs to meet other regulatory requirements.
Mr. Robinson. Right.
Mr. McClintock. The Chairman mentioned the Klamath Dam
situation, which is just an incredible scandal.
Mr. Robinson. Right.
Mr. McClintock. Four perfectly good hydroelectric dams on
the Klamath River, capable of generating 155 megawatts of the
cleanest and cheapest electricity on the planet, and there is a
concerted effort to tear them down. Why? Because, we are told,
they are contributing to a catastrophic decline of salmon on
the Klamath River.
When I was up there--that is up on the north end of my
district--I said, ``Well, why doesn't somebody build a fish
hatchery?''
And there was an awkward silence around the table, and
finally somebody volunteered, ``Well, we do have a fish
hatchery at the Iron Gate Dam. It produces 5 million salmon
smolts a year; 17,000 of them return every year as fully grown
adults to spawn. They won't let us include them in the
population counts.''
How are we going to be able to meet our future electricity
needs with that kind of lunacy dominating our public policy? I
suppose that is more of a rhetorical question than a technical
one. So let me go to the technical side of it.
They then tell us, ``Oh, don't worry, we will replace this
with wind and solar.'' Well, on the same energy commission
study wind and solar were named as the two most expensive
possible ways of producing electricity.
And, on top of that, as you know, they are intermittent,
meaning that they have to constantly--because of a cloud
passing over a solar ray or a sudden drop off in the wind at a
solar farm brings the electricity generation to zero, and
because we have to constantly match the electricity going on
the grid with the electricity being drawn off or the grid
collapses, we have to be ready to, at a moment's notice,
replace that lost wind and solar power with reliable
electricity. We either do that through hydroelectricity through
dams, we just open a valve, or we have to pay to keep turbines
constantly spinning with gas or coal-fired plants to meet that
sudden loss.
Is that a rational policy, to tear down hydroelectric dams
and replace them with wind and solar?
Mr. Robinson. In my opinion, no. Hydropower not only
provides that black start capability of coming online
immediately when you do have intermittent energy sources--that
problem, but you also have--if you take a hydro project out, to
replace a 500-megawatt hydropower project with wind, you need
about 30,000 to 35,000 acres of land with wind turbine, 1.5
megawatt wind turbines on it. Wind does not come
environmentally without cost. So you have an existing project,
some costs have incurred. Some benefits have occurred to the
environment, as well, with those projects recreation-wise,
fishery-wise. But you are eliminating that, and you are
incurring new costs with new lands being dedicated to wind.
That just doesn't make sense to me.
Mr. McClintock. Mr. Maisch, in our neck of the woods is the
site for the Auburn Dam. The most expensive part of that
construction was done in the 1970s, the actual cutting of the
footing for that facility. It is estimated to produce 800
megawatts of the cleanest and cheapest electricity on the
planet, but it was abandoned in the 1970s.
If that dam had been constructed, what would that have
meant for your rate payers?
Mr. Maisch. The--it would have allowed us to get our water
out of the system in a much more economical manner. As it is,
we are having to pump it up. The energy would have gone into
the grid. It probably would have reduced overall cost to
operate the electric grid in California.
Mr. McClintock. Well, especially if it was coming off that
dam at a half-a-cent a kilowatt hour, as it was before the
Government came here to help us.
Mr. Robinson, do you have an estimate of the undeveloped
hydropower potential of this country?
Mr. Robinson. It does exist. The most recent estimate was
by DOE for existing dams, and it was 12 gigawatts of available
power.
Mr. McClintock. No, I am talking about potential dam sites.
Do we have any study on that?
Mr. Robinson. Potential dam sites, it has been done. I
don't remember the exact number any longer, I am sorry.
The Chairman. The time of the gentleman has expired. I want
to thank all the Members, and I want to thank all the panel
here for their testimony.
What--this may be the first in a series of future hearings,
because what we have--what has at least come to light that
hasn't come to light here before is that there is certainly a
lot of uncertainty in the re-licensing. I think that is pretty
obvious. But there are many statutes that come into play that
causes the process to slow down. I mean coming from the
Northwest, I am painfully aware. And that is why we have had
hearings on the Endangered Species Act, for example. Mr.
McClintock alluded to that in his remarks.
But I want to thank the panel for being here. As usual,
there generally are questions that may come up and we will
write to you if those questions come up. And if you have
additional views you would like to present, the record will be
open for 10 days.
So, once again, I want to thank all of you for your
testimony here. And if there is no further business to come
before the Committee, the Committee stands adjourned.
[Whereupon, at 11:22 a.m., the Committee was adjourned.]