[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
MODERNIZING ENERGY INFRASTRUCTURE: CHALLENGES AND OPPORTUNITIES TO
EXPANDING HYDROPOWER GENERATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MARCH 15, 2017
__________
Serial No. 115-12
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Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
TIM MURPHY, Pennsylvania ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas GENE GREEN, Texas
MARSHA BLACKBURN, Tennessee DIANA DeGETTE, Colorado
STEVE SCALISE, Louisiana MICHAEL F. DOYLE, Pennsylvania
ROBERT E. LATTA, Ohio JANICE D. SCHAKOWSKY, Illinois
CATHY McMORRIS RODGERS, Washington G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland
PETE OLSON, Texas JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida YVETTE D. CLARKE, New York
BILL JOHNSON, Ohio DAVID LOEBSACK, Iowa
BILLY LONG, Missouri KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana JOSEPH P. KENNEDY, III,
BILL FLORES, Texas Massachusetts
SUSAN W. BROOKS, Indiana TONY CARDENAS, California
MARKWAYNE MULLIN, Oklahoma RAUL RUIZ, California
RICHARD HUDSON, North Carolina SCOTT H. PETERS, California
CHRIS COLLINS, New York DEBBIE DINGELL, Michigan7
KEVIN CRAMER, North Dakota
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
Subcommittee on Energy
FRED UPTON, Michigan
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOE BARTON, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois SCOTT H. PETERS, California
TIM MURPHY, Pennsylvania GENE GREEN, Texas
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
GREGG HARPER, Mississippi KATHY CASTOR, Florida
DAVID B. McKINLEY, West Virginia JOHN P. SARBANES, Maryland
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
BILL JOHNSON, Ohio DAVID LOEBSACK, Iowa
BILLY LONG, Missouri KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana JOSEPH P. KENNEDY, III,
BILL FLORES, Texas Massachusetts
MARKWAYNE MULLIN, Oklahoma G.K. BUTTERFIELD, North Carolina
RICHARD HUDSON, North Carolina FRANK PALLONE, Jr., New Jersey (ex
KEVIN CRAMER, North Dakota officio)
TIM WALBERG, Michigan
GREG WALDEN, Oregon (ex officio)
(ii)
C O N T E N T S
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Page
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 1
Prepared statement........................................... 3
Hon. Scott H. Peters, a Representative in Congress from the State
of California, opening statement............................... 3
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 5
Prepared statement........................................... 6
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 7
Prepared statement........................................... 9
Witnesses
Kieran Connolly, Vice President, Generation Asset Management,
Bonneville Power Administration................................ 11
Prepared statement........................................... 13
Answers to submitted questions............................... 121
Chuck Hookham, Director, New Business Development and Projects,
CMS Energy, on Behalf of the American Society of Civil
Engineers...................................................... 22
Prepared statement........................................... 24
Dave Steindorf, California Special Projects Director, American
Whitewater, on Behalf of the California Hydropower Reform
Coalition...................................................... 38
Prepared statement........................................... 40
Answers to submitted questions............................... 126
Ramya Swaminathan, Chief Executive Officer, Rye Development, on
Behalf of the National Hydropower Association.................. 48
Prepared statement........................................... 50
Answers to submitted questions............................... 140
Submitted Material
Statement of American Rivers, March 15, 2017, submitted by Mr.
Upton.......................................................... 106
Letter of March 14, 2017, from Adam Cramer, Executive Director,
Outdoor Alliance, to Mr. Upton and Mr. Rush, submitted by Mr.
Upton.......................................................... 115
Statement of Sacramento Municipal Utility District, March 15,
2017, submitted by Mr. Upton................................... 118
MODERNIZING ENERGY INFRASTRUCTURE: CHALLENGES AND OPPORTUNITIES TO
EXPANDING HYDROPOWER GENERATION
----------
WEDNESDAY, MARCH 15, 2017
House of Representatives,
Subcommittee on Energy,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 1:16 p.m., in
room 2123, Rayburn House Office Building, Hon. Fred Upton
(chairman of the subcommittee) presiding.
Members present: Representatives Upton, Barton, Murphy,
Harper, McKinley, Kinzinger, Griffith, Johnson, Long, Bucshon,
Flores, Mullin, Hudson, Walberg, Walden (ex officio), Peters,
Castor, Tonko, Schrader, Kennedy, and Pallone (ex officio).
Staff present: Grace Appelbe, Staff Assistant; Elena
Brennan, Legislative Clerk, Oversight and Investigations;
Jordan Davis, Director of Policy and External Affairs; Wyatt
Ellertson, Research Associate, Energy and Environment; Adam
Fromm, Director of Outreach and Coalitions; Tom Hassenboehler,
Chief Counsel, Energy and Environment; Zach Hunter, Director of
Communications; A.T. Johnson, Senior Policy Advisor/
Professional Staff, Energy and Environment; Ben Lieberman,
Senior Counsel, Energy; Brandon Mooney, Senior Policy Advisor,
Energy; Mark Ratner, Policy Coordinator; Annelise Rickert,
Counsel, Energy; Dan Schneider, Press Secretary; Hamlin Wade,
Special Advisor for External Affairs; Everett Winnick, Director
of Information Technology; Jeff Carroll, Minority Staff
Director; Jean Fruci, Minority Policy Advisor, Energy and
Environment; Rick Kessler, Minority Senior Advisor and Staff
Director, Energy and Environment; John Marshall, Minority
Policy Coordinator; Dan Miller, Minority Staff Assistant;
Alexander Ratner, Minority Policy Analyst; Tuley Wright,
Minority Energy and Environment Policy Advisor; and C.J. Young,
Minority Press Secretary.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Good afternoon, everyone.
I don't know if all Members have heard, but our ranking
subcommittee member's wife passed away this weekend, so why
don't we have a brief moment of silence for her.
[Moment of silence.]
Thank you.
So today's hearing, ``Modernizing Energy Infrastructure:
Challenges and Opportunities to Expanding Hydropower
Generation,'' continues this committee's efforts to examine
what we need to do to keep our infrastructure the very best in
the world.
I want to start certainly by thanking our witnesses for
appearing before us today. Their testimony is going to continue
to give us a better understanding of the current state of
hydropower in the United States so that we can identify ways to
improve the regulatory process, modernize our aging
infrastructure, and ensure consumers continue to have access to
reliable and affordable electricity produced from hydropower.
Our hydropower fleet is aging. Yes, it is. Hydropower
plants are among the oldest power plants in the U.S. In fact,
according to the Energy Information Administration, the average
hydropower facility has been operating for 64 years--I am 63--
and the 50 oldest electric generating plants in the U.S. are
all hydropower. Each has been in service since 1908. That was
the last year until this year the Cubs won the World Series.
As a result, more than 500 projects, representing about 50
percent of non-Federal hydro licenses, will begin the
relicensing process before 2030.
The regulatory environment for hydropower has become
increasingly challenging. Licensing new hydropower facilities
and relicensing existing facilities requires extensive
consultation with multiple Federal, State, and local government
entities. The process takes years and costs often tens of
millions of dollars, and as a result, needed investments are
too often discouraged or unnecessarily delayed. And in some
cases the cost to modernize or meet environmental objectives
outweighs the potential economic benefits of continued
operation and the plants have to be shut down.
In many ways, licensing challenges are limiting
hydropower's potential. So, with sound policy and smarter regs,
hydropower could have a very bright future.
Hydro is the Nation's number one renewable, producing
electricity with negligible emissions. Today, it is responsible
for providing 7 percent of the Nation's total energy needs, and
with continued technological advancements and smarter regs,
hydropower generation could expand by an additional 50 percent
by the year 2025.
These are things that Congress could do to maximize
hydropower's potential. This committee advanced legislation
last Congress that would improve the licensing process, promote
efficiency improvements, and encourage pump storage and
development of nonpowered dams. While we were not able to agree
on the hydropower reform package in the context of the larger
energy bill, significant progress was made, and I am hopeful, I
am encouraged, and I am optimistic that we are going to be able
to deliver this time around.
Hydro, as we know, is clean, affordable, reliable. Updating
and modernizing the hydro infrastructure will incentivize
economic development, create jobs, and strengthen our energy
security. I look forward to working with all of my colleagues
on both sides of the aisle to really see this happen in this
Congress.
And I yield back my time and recognize the acting ranking
member of the powerful Energy and Power Subcommittee, the
gentleman from California, Mr. Peters, for 5 minutes.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
Today's hearing--``Modernizing Energy Infrastructure:
Challenges and Opportunities to Expanding Hydropower
Generation''--continues this committee's efforts to examine
what we need to do to keep our infrastructure the best in the
world.
I want to start by thanking the witnesses for appearing
before us today. Their testimony will give us a better
understanding of the current state of hydropower in the U.S. so
that we can identify ways to improve the regulatory process,
modernize our aging infrastructure, and ensure consumers
continue to have access to reliable and affordable electricity
produced from hydropower.
Our hydropower fleet is aging. Hydropower plants are among
the oldest power plants in the United States. In fact,
according to the Energy Information Administration, the average
hydropower facility has been operating for 64 years, and the 50
oldest electric generating plants in the United States are all
hydropower; each has been in service since 1908. As a result,
more than 500 projects--representing about 50 percent of non-
Federal hydropower licenses--will begin the relicensing process
before 2030.
The regulatory environment for hydropower has become
increasingly challenging. Licensing new hydropower facilities
and relicensing existing facilities requires extensive
consultation with multiple Federal, State, and local government
entities. The process takes years and costs tens of millions of
dollars. As a result, needed investments are too often
discouraged or unnecessarily delayed. In some cases, the costs
to modernize or meet environmental objectives outweighs the
potential economic benefits of continued operation and the
plants have to be shut-down. In many ways, licensing challenges
are limiting hydropower's potential.
With sound policy and smarter regulations, hydropower could
have a very bright future. Hydropower is the Nation's number
one renewable, producing electricity with negligible emissions.
Today, it's responsible for providing 7 percent of the Nation's
total energy needs. With continued technological advancements
and smarter regulations, hydropower generation could expand by
an additional 50 percent by 2025.
There are things Congress could do to maximize hydropower's
potential. This committee advanced legislation last Congress
that would improve the licensing process, promote efficiency
improvements, and encourage pumped-storage and development of
non-powered dams. While we were not able to agree on the
hydropower reform package in the context of the big energy
bill, significant progress was made and I am hopeful that we'll
be able to deliver this time around.
Hydro is clean, affordable, and reliable. Updating and
modernizing hydropower infrastructure will incentivize economic
development, create jobs, and strengthen our energy security. I
look forward to working with all my colleagues to bring more
hydro to the Nation. Thank you.
OPENING STATEMENT OF HON. SCOTT H. PETERS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Peters. Thank you very much, Mr. Chairman.
It is an honor to stand in today for the ranking member of
the Energy Subcommittee, my colleague, Bobby Rush. And I too
want to acknowledge that he couldn't be here today because of
the passing of his wife of 36 years, Carolyn. And I want him to
know that my thoughts, and everyone in the room, are with him
and his family during this difficult time.
This hearing on modernizing energy infrastructure, and
specifically expanding hydropower generation, comes at a
critical juncture in America's energy landscape. Our economy is
undergoing a rapid transition, with decisive leaps in
technology happening every day. And front and center in the
changing economy of this decade is the fundamental shift in the
way we power our world.
Transition to a clean economy is happening right now.
America has an opportunity to diversify our energy sources and
give our children a future with cleaner air, cleaner water, and
greater economic opportunities, and hydropower plays an
important role in that transition, because it is always on.
Hydropower provides zero-emission base load generation that
can help our country meet our energy goals and commitments to
the global community made in the Paris Agreement last year.
Hydropower offsets over 190 million metric tons of
CO2 each year, the equivalent of over 40 million
cars on the road.
Yet America's aging infrastructure and onerous licensing
processes are making it harder for States, local governments,
and the private sector to adopt and expand new forms of energy,
like hydropower.
Just 5 days ago, the American Society of Civil Engineers
report card gave the United States infrastructure a D-plus and
gave dams a slightly higher grade of D. That is probably still
not good enough. And this average age of the country's 90,000
dams--I have 56 years old, which is a little bit closer to my
age than the chairman's, but still too old. And today, only
about 3 percent are equipped to generate clean power.
So the first step forward is to provide sufficient funding
to modernize our infrastructure. I would like to hear more from
our witnesses about where they see the greatest need to make
those long-term investments to expand hydropower generation.
Another critical step is regulatory reform. Hearing from
industry, it takes on average 8 years and sometimes as long as
10 years or more to relicense an existing project. And if the
time and cost of licensing these projects exceeds the point
where the project can be profitable, we know that investment in
this clean energy source will decrease.
So, in these cases, our regulatory regime is incentivizing
municipalities and the private sector not to invest in clean
energy. That is not what any of us want.
So any kind of regulatory reform, we know, must maintain
protections for fish, wildlife, natural resources, and water
quality, and I am confident we can do that, but we can still
eliminate duplicative processes and enhance interagency
coordination. It is a false choice that we can't have both a
clean, safe environment and a regulatory process in place to
ensure that investment in clean energy remains a cost-
competitive option.
I look forward to hearing from our witnesses how Congress
and this committee specifically can act in a bipartisan way to
modernize our energy infrastructure and facilitate the
expansion of hydropower energy generation in a way that is
sustainable.
And I look forward to the testimony. And I yield back, Mr.
Chairman. Thank you.
Mr. Upton. Thank you.
The Chair would recognize for an opening statement the
chairman of the full committee, the wonderful gentleman from
the good State of Oregon, Mr. Walden.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. I thank the gentleman from Michigan. I want to
stand up on his behalf. I was going to potentially move to have
the gentleman from California's words taken down when he was
taking the shot at you about age, that his dams were closer to
your age than his.
Mr. Upton. The good thing is that I look younger still.
Mr. Walden. That is right.
I want to welcome our witnesses, and especially Kieran
Connolly, who is with the Bonneville Power Administration. We
are glad you are here. You all do a great job out in Oregon and
for the Northwest.
One of the many challenges and advantages, frankly, the
great advantage of living in Oregon is the plentiful supply of
affordable, reliable, and clean hydropower. Hydropower is great
for homeowners as well as job-creating businesses. We know that
well in the Northwest. However, even in the Pacific Northwest,
we have additional opportunities, as we do across the country,
to take greater advantage of this valuable resource.
This hearing is a crucial step in the Energy Subcommittee's
efforts to modernize our Nation's electricity infrastructure,
and today we will focus on the challenges and opportunities in
expanding hydropower generation.
For over a century, hydropower has provided electricity to
millions of Americans across our Nation. The United States and
Canada led the way in hydropower engineering for the first half
of the 20th century. In 1936, the Hoover Dam became the world's
largest hydroelectric plant, generating 1,345 megawatts. Six
years later, in 1942, the Grand Coulee Dam in Washington State
surpassed the Hoover Dam in electricity-generation capacity.
As a footnote, when Richard Nixon came out to The Dalles,
Oregon, to dedicate The Dalles Dam, my father was the master of
ceremonies for those day's activities. And so this has gone on
for generations.
And, obviously, in my home State of Oregon, hydropower is
one of the largest sources of electricity generation and
provides over half of Oregon's electricity-generation needs. In
fact, Mr. Connolly, representing BPA, his organization is
responsible for marketing the Northwest's wholesale electrical
hydropower.
So I look forward to hearing more about Bonneville's
balance, how you balance the various objectives while carrying
out your mission of producing and delivering reliable,
affordable power to consumers across the Pacific Northwest. You
get kind of wrapped around the axle by Governors and courts,
and interest groups of all sides, so it is a challenge.
The electricity generated from hydropower allows for a
diverse energy mix, which in turn increases our Nation's energy
security and reliability. A recent DOE report found that U.S.
hydropower production could grow by almost 50 percent by year
2050. I know a lot of that is up in Alaska. This potential
increase in hydropower production would boost job growth,
increase economic investment, facilitate the use of wind and
other intermittent renewables, and avoid harmful emissions from
the electric power sector.
In reading through the various testimonies that you all
submitted, I found it very interesting on the pump storage
piece and the limits and opportunities on hydro and what is
involved there, and it is important to get the right balance,
and how we can harness all those to really work with the
renewable energy resources as well, because getting that grid
balanced right is very important. And I have seen the swings in
the charts of wind energy a thousand megawatts up one hour and
down the next, and somehow you make all that work.
Despite the numerous benefits of hydropower, the greatest
impediment facing its growth is the regulatory process. Take
the Bowman Dam in Crook County, Oregon, for example. For many
years, I and some others in the delegation worked to pass
legislation to help pave the way for future hydropower and jobs
in central Oregon. Even after the bill was passed unanimously
and signed into law in 2014, it took more than a year for that
new law to be implemented.
But it is not just the delays. The licensing of new
hydropower facilities and the relicensing of existing
facilities is really costly and takes forever. The process
often requires 7 to 10 years to complete and costs tens of
millions of dollars. We would like to find a way to streamline
that, frankly, but recognizing the importance of stakeholders
having an opportunity to make their case.
As I have stated before, my objectives at the committee
start with the consumer. If we put the consumer first in our
discussion, we will end up with really good public policy. A
diverse energy mix empowers consumers by giving them choices in
different energy sources. The electricity generated by
hydropower is as clean and renewable it gets.
When it comes to improving our Nation's laws regarding
hydropower development, we in Congress have the opportunity to
reach across the aisle, and I think we can get some good things
done for the environment, for reduction of carbon emissions,
and for the economy.
And as this subcommittee continues its efforts to modernize
our Nation's energy infrastructure through technology, neutral
improvements, and expansion, we have to bring greater
transparency, efficiency, and accountability to the regulatory
process affecting hydropower and more.
So, again, thank you for your testimony. I am juggling
between two subcommittees. You probably see other Members doing
that. We do the Nation's work here, and we really appreciate
your contributing to our public policy debate and discussion.
With that, Mr. Chairman, I yield back the balance of my
time.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
One of the many advantages of living in Oregon is the
plentiful supply of affordable, reliable, and clean hydropower.
Hydropower is great for homeowners as well as job-creating
businesses. However, even in the Pacific Northwest we have
additional opportunities-as we do across the country to take
greater advantage of this valuable resource.
This hearing is a crucial step in the energy subcommittee's
efforts to modernize our Nation's energy infrastructure, and
today we will focus on the challenges and opportunities in
expanding hydropower generation.
For over a century, hydropower has provided electricity to
millions of Americans across our Nation. The United States and
Canada led the way in hydropower engineering for the first half
of the 20th century. In 1936, the Hoover Dam became the world's
largest hydroelectric plant generating 1,345 megawatts. Six
years later in 1942, the Grand Coulee Dam in Washington State
surpassed the Hoover Dam in electricity generation capacity. In
my home State of Oregon, hydropower is the largest source of
electricity generation and provides over half of Oregon's
electricity generation needs. In fact, one of our witnesses
here today, Mr. Connolly, is representing the Bonneville Power
Administration, the nonprofit Federal organization responsible
for marketing the Northwest's wholesale electrical hydropower.
I look forward to hearing how Bonneville Power balances
multiple objectives while carrying out its mission of producing
and delivering reliable power to customers across the Pacific
Northwest.
The electricity generated from hydropower allows for a
diverse energy mix, which in turn increases our Nation's energy
security and reliability. A recent DOE report found that U.S.
hydropower production could grow by almost 50 percent by year
2050. This potential increase in hydropower production would
boost job growth, increase economic investment, facilitate the
use of wind and other intermittent renewables, and avoid
harmful emissions from the electric power sector.
Despite the numerous benefits of hydropower, the greatest
impediment facing its growth is the regulatory process. Take
the Bowman Dam in Crook County Oregon, for example. For many
years, I worked to pass legislation to help pave the way for
future hydropower and jobs in Central Oregon. Even after the
bill was passed unanimously and signed into law in 2014, it
took more than a year for that new law to be implemented. But
it's not just bureaucratic delays. The licensing of new
hydropower facilities and the relicensing of existing
facilities is costly and time consuming. The process often
requires 7 to 10 years to complete and costs tens of millions
of dollars.
As I've stated before, my objectives at the committee are
to put consumers first in all that we do. A diverse energy mix
empowers consumers by giving them choices in different energy
sources. The electricity generated by hydropower is as clean
and renewable as its gets. When it comes to improving our
Nation's laws regarding hydropower development, we in Congress
have the opportunity to reach across the aisle and get good
things done for the environment, for reduction of carbon
emissions and for the economy. As this subcommittee continues
its efforts to modernize our Nation's energy infrastructure
through technology-neutral improvement and expansion, we must
bring greater transparency, efficiency and accountability to
the regulatory processes affecting hydropower.
Mr. Upton. The gentleman yields back.
I would note that, because of the weather issues yesterday,
we have a good number of Members that were stranded in their
district and not able to get back, juggling flights to get in
and out, as well.
Mr. Walden. And, Mr. Chairman, just a point of personal
privilege. I want to join in my colleagues about paying our
respects to Bobby Rush at the loss of his wife.
Mr. Upton. And we had a moment of silence. She was a
wonderful woman, great partner.
Mr. Walden. And, you know, I know he expressed--well, he
was afraid it was going to happen when we were having our
markup. And that is one of the hardest things people go
through, is loss of a spouse. So he is in all our thoughts and
prayers.
Mr. Upton. Yes. Absolutely.
The Chair would recognize the ranking member of the full
committee, the gentleman from New Jersey, Mr. Pallone, for 5
minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman. And let me also
express my sympathy for Bobby. I actually had the chance to
talk to him after his wife passed away, and he seemed in pretty
good shape. But as our full committee chairman said, it has got
to be difficult. So I want to express my sympathy as well
publicly.
Mr. Chairman, that is Chairman Upton, let me thank you for
holding today's hearing on the challenges and opportunities of
modernizing our hydroelectric power infrastructure. As I have
said before, Democrats strongly support modernizing our energy
infrastructure, much of which is outdated or on the verge of
disrepair or inadequate for today's needs.
Hydroelectric power is among the most mature generating
technologies providing substantial, virtually carbon-free base
load energy at low cost to our manufacturing sector and to
residential and commercial consumers. It is an important asset
that we need to maintain.
At the same time, it also has major impacts on fish and
wildlife populations, water quality, water supply management,
and other important physical and cultural resources if poorly
operated or sited. For example, there are numerous examples of
hydroelectric dams devastating lands and waters sacred to
Native American Tribes, and this should not happen. While
hydroelectric power licenses depend on rivers for free fuel,
those rivers belong to all Americans, not just those who sell
or buy the power generated from it.
The Federal Power Act requires the Federal Energy
Regulatory Commission, or FERC, to balance those competing
interests in issuing a license. No interest, whether it be
power, drinking water, irrigation, commercial fishery,
recreation, or other use, should automatically take precedence
in the licensing process.
The Power Act authorizes States and Federal natural
resource agencies to place conditions on hydroelectric licenses
to preserve water quality, protect public lands and Native
American reservations, and ensure proper fish passage to
preserve healthy ecosystems and fisheries.
If, for instance, a license might adversely impact a
protected area, such as a National Park, or cause the release
of toxic sediment into drinking or agricultural water supplies
or flood a Native American reservation, the State or Federal
agency responsible for managing these resources can place
conditions on the license to ensure that those resources are
protected.
And hydroelectric licenses have fixed conditions that
generally remain unchanged during the 30 or 50 years that they
are in force. Licenses also benefit from unlimited automatic
annual extensions after the license has expired if a new
license has not been issued. As a result, the impacts of these
hydropower dams often go unaddressed for more than half a
century.
For those facilities first licensed before enactment of the
National Environmental Policy Act or the Clean Water Act and
the Endangered Species Act, the licensing process certainly can
be rather rigorous. Sometimes the necessity of addressing these
complex issues also makes the process time-consuming and
expensive, as new license conditions will require significant
upgrades to old facilities to bring them in line with modern
environmental laws and regulations.
Now, ironically, climate change has increased the need to
license new capacity of this carbon-free generating technology
at the same time it has caused record droughts that have made
it more difficult to site new works or provide long-term
relicensing of existing facilities. Climate-induced changes in
hydrology, including the record drought in the West that just
ended, are calling into question the reliability of existing
facilities, and these changes are also upending the economics
of siting new hydropower capacity and increasing the challenges
associated with addressing hydropower's environmental issues.
In addition to the unique challenges faced by the
hydropower industry, the significant changes in electricity
markets and relatively flat demand for electricity create a
difficult financial environment for developing new base load
generation in many areas of the country. Some of the unique
benefits that hydropower and pump storage can offer cannot be
fully compensated by current electricity rate structures.
So I am glad we are holding this hearing today, and I urge
the chairman to hold more like this before we begin to discuss
legislation. We must understand more fully the challenges
facing the hydropower industry and the rivers the industry
relies upon before we update our policies. Our goal should be
to maintain the fundamental principles of balance in the
process so that we maximize the benefits of hydroelectric power
and expand it where it is most appropriate to do so.
I know we have an excellent panel here today to start this
process, and I thank you for being here. I am sure you have
been told that we are bouncing back and forth with the other
subcommittees, so you may not see you us the whole time. But
thank you.
Thank you, Mr. Chairman. I yield back.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
Mr. Chairman, thank you for holding today's hearing on the
challenges and opportunities of modernizing our hydroelectric
power infrastructure. As I've said before, Democrats strongly
support modernizing our energy infrastructure, much of which is
outdated, on the verge of disrepair, or inadequate for today's
needs.
Hydroelectric power is among the most mature generating
technologies providing substantial, virtually carbon-free,
baseload energy at low cost to our manufacturing sector and to
residential and commercial consumers. It is an important asset
we need to maintain.
At the same time, it also has major impacts on fish and
wildlife populations, water quality, water supply management,
and other important physical and cultural resources if poorly
operated or sited. For example, there are numerous examples of
hydroelectric dams devastating lands and waters sacred to
Native American Tribes. This should not happen. While
hydroelectric power licensees depend on rivers for free fuel,
those rivers belong to all Americans, not just those who sell
or buy the power generated from it.
The Federal Power Act requires the Federal Energy
Regulatory Commission (FERC) to balance those competing
interests in issuing a license. No interest, whether it be
power, drinking water, irrigation, commercial fishery,
recreation, or other use should automatically take precedence
in the licensing process. The Power Act authorizes States and
Federal natural resource agencies to place conditions on
hydroelectric licenses to preserve water quality, protect
public lands and Native American reservations, and ensure
proper fish passage to preserve healthy ecosystems and
fisheries. If, for instance, a license might adversely impact a
protected area such as a National Park, or cause the release of
toxic sediment into drinking or agricultural water supplies, or
flood a Native American reservation, the State or Federal
agency responsible for managing those resources can place
conditions on the license to ensure those resources are
protected.
Hydroelectric licenses have fixed conditions that generally
remain unchanged during the 30 to 50 years they are in force.
Licensees also benefit from unlimited, automatic, annual
extensions after their license has expired if a new license has
not been issued. As a result, the impacts of these hydropower
dams often go unaddressed for more than half a century. For
those facilities first licensed before enactment of the
National Environmental Policy Act, the Clean Water Act, and the
Endangered Species Act in the 1970s, the licensing process
certainly can be quite rigorous. Sometimes, the necessity of
addressing these complex issues also makes the process time-
consuming and expensive as new license conditions will require
significant upgrades to old facilities to bring them in line
with modern environmental laws and regulations.
Ironically, climate change has increased the need to
license new capacity of this carbon-free generating technology
at the same time it has caused record droughts that have made
it more difficult to site new works or provide long-term
relicensing of existing facilities. Climate-induced changes in
hydrology--including the record drought in the west that just
ended- are calling into question the reliability of existing
facilities. These changes are also upending the economics of
siting new hydropower capacity, and increasing the challenges
associated with addressing hydropower's environmental issues.
In addition to the unique challenges faced by the
hydropower industry, the significant changes in electricity
markets and relatively flat demand for electricity creates a
difficult financial environment for developing new baseload
generation in many areas of the country. Some of the unique
benefits that hydropower and pumped storage can offer cannot be
fully compensated by current electricity rate structures.
So, I'm glad we're holding this hearing today and I urge
the Chairman to hold more like this before we begin to discuss
legislation. We must understand more fully the challenges
facing the hydropower industry and the rivers the industry
relies upon before we update our policies. Our goal should be
to maintain the fundamental principles of balance in the
process so that we maximize the benefits of hydroelectric power
and expand it where it is most appropriate to do so.
We have an excellent panel here today to start this
process. I thank you all for being here to participate in this
important effort.
Mr. Upton. The gentleman yields back.
Again we want to thank our witnesses for being here. I
appreciate you submitting your testimony early so we had a
chance to look at it prior to the hearing. And we would like
each of you now to summarize your statement, taking no more
than 5 minutes.
We are joined by Mr. Chuck Hookham, director of NBD
Services for CMS Energies, on behalf of the American Society of
Civil Engineers; Kieran Connolly, vice president of generation
and asset management from the Bonneville Power Administration,
as Chairman Walden indicated; Ramya Swaminathan, CEO of Rye
Development, on behalf of the National Hydropower Association;
and Dave Steindorf, California stewardship director of American
Whitewater, on behalf of the Hydropower Reform Coalition.
And we will start in the order that you are at the table.
Mr. Connolly, welcome. Thank you for being here today.
STATEMENTS OF KIERAN CONNOLLY, VICE PRESIDENT, GENERATION ASSET
MANAGEMENT, BONNEVILLE POWER ADMINISTRATION; CHUCK HOOKHAM,
DIRECTOR, NEW BUSINESS DEVELOPMENT AND PROJECTS, CMS ENERGY, ON
BEHALF OF THE AMERICAN SOCIETY OF CIVIL ENGINEERS; DAVE
STEINDORF, CALIFORNIA SPECIAL PROJECTS DIRECTOR, AMERICAN
WHITEWATER, ON BEHALF OF THE CALIFORNIA HYDROPOWER REFORM
COALITION; AND RAMYA SWAMINATHAN, CHIEF EXECUTIVE OFFICER, RYE
DEVELOPMENT, ON BEHALF OF THE NATIONAL HYDROPOWER ASSOCIATION
STATEMENT OF KIERAN CONNOLLY
Mr. Connolly. Good afternoon, Mr. Chairman. My name is
Kieran Connolly, and I am vice president for generation and
asset management at Bonneville Power Administration. I
appreciate the subcommittee's invitation to be here today, and
I ask that my written remarks be entered into the record.
Bonneville is a Federal power marketing administration
headquartered in Portland, Oregon, and is one of the largest
providers of low-cost renewable energy in the Nation, marketing
power generated primarily at 31 Federal hydroelectric dams.
These dams are owned and operated by the U.S. Army Corps of
Engineers and the Bureau of Reclamation.
Bonneville and our partners are able to maintain these
projects through direct funding of the power portion of the
costs at the dam. Direct funding allows Bonneville to fund
operations and maintenance as needed and appropriate.
Bonneville also direct funds' substantial investments in the
rehabilitation of the hydropower system as its components
require replacement.
Bonneville provides this funding through power sales and
borrowing from the U.S. Treasury that is fully recovered
through power ratepayers. The interest on Bonneville's debt is
at rates comparable to those for similar bonds issued by
government corporations.
Bonneville's partnership with the Corps and Reclamation
provides for a sound program of maintenance and modernization
of Federal hydro generation assets. In 1999, Bonneville, the
Corps and Reclamation produced the first asset management
strategy for the FCRPS. Today, a collaborative team from the
three agencies builds on that legacy through the use of
industry-leading asset assessment tools and portfolio
optimization to efficiently care for these facilities.
Bonneville and our partners rely on third-party vendors for
much of our generation rehabilitation work. A promising
initiative I would like to raise for the subcommittee's
awareness is recent discussions between the Corps and the
Federal PMAs to improve the acquisition and delivery process
for major hydropower equipment.
Historically, because of its complexity, the acquisition
process can be cumbersome, resulting in prolonged unit outages
and cost overruns. These issues reduce generation, resulting in
lost revenue and increased replacement power expenses for the
PMAs. In turn, these circumstances contribute to rate increases
that diminish the product value for power customers.
The Corps and the PMAs have established a work plan to
address these challenges, and I appreciate the Corps'
commitment to this effort.
The FCRPS is also unique in the extensive modifications and
operational challenges made for the recovery of fish and
wildlife. This is a responsibility we take seriously and are
committed to. Since the 1980 Northwest Electric Power Planning
and Conservation Act, hydro revenues have committed billions of
dollars toward structures and revised operations of the dams,
as well as offsite restoration efforts for watershed health
that have received broad regional support. The trend of salmon
and steelhead survival is up, posting returns that by some
measures approached those before Bonneville Dam was built.
The Northwest as a whole has engaged in examining the
science and is committed to long-term strategies. However, some
parties to litigation of the Federal hydro system continue to
call for additional spill, when fish are migrating, as a
presumptive path, foregoing nonpolluting power generation.
Bonneville believes the Federal hydro system is operating with
carefully calibrated conditions for fish, defined and guided by
scientific evidence.
In the same litigation, we are very concerned about motions
to suspend specific maintenance and modernization projects at
the dams. Poorly maintained equipment and the resulting risk to
generating units is not a trivial matter to the reliability,
safety, and environmental performance of the system. This issue
is in litigation in the U.S. District Court in Oregon and was
the subject of a hearing in that court last week.
Finally, western electricity markets' design is evolving,
responding to State mandates, Federal incentives, and the
declining cost of technology. Much of the new resource
development is in intermittent generation, particularly wind
and solar. Hydropower offers flexibility to integrate these
resources reliably, and Bonneville believes the value of
hydropower for these types of services needs to be recognized
in market design.
An additional development in the evolving electricity
market is the impact of low natural gas prices and, to a lesser
extent, renewable resource incentives on the wholesale market
price for electricity. Under these conditions, Bonneville's
surplus power sales have not generated the levels of revenue
historically experienced. Consequently, the appropriate
valuation of hydropower in the evolving market is important for
sustaining funding for congressionally authorized programs
while retaining competitive rates for Bonneville's customers.
Bonneville is proud of the tradition of collaboration with
the Corps and Reclamation for operation and maintenance of the
FCRPS and with numerous other regional partners for the
sustainability of the Columbia River's Federal hydro system.
That concludes my testimony, Mr. Chairman. I would be happy
to answer the subcommittee's questions.
[The prepared statement of Mr. Connolly follows:]
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Mr. Upton. Thank you very much.
Mr. Hookham.
STATEMENT OF CHUCK HOOKHAM
Mr. Hookham. Chairman Upton, Congressman Peters, members of
the subcommittee, thanks for having me. I am a 36-year-veteran
professional engineer, worked on quite a few hydro projects, so
I think I am pretty well qualified to talk about this. I am
from Michigan. I apologize for the weather. I think I can talk
on behalf of Congressman----
Mr. Upton. You should be happy, if you are from Michigan.
Mr. Hookham. I feel comfortable.
Mr. Upton. We will give you an extra 10 minutes.
Mr. Hookham. So I am speaking on behalf of the American
Society of Civil Engineers. Last week we came out with the
Infrastructure Report Card, which I hope you have all seen. It
talks a lot about the infrastructure problems across 16
different categories, one of which is energy, and talks to the
troubles we are having getting funding and doing the right
things.
ASC is very active finding solutions. Believe me, we are
not just reporting bad grades; we are trying to come up with
strategies. And so I would implore on the committee,
subcommittee to talk to us about strategies, priorities, and
how to make sure we can correct these things.
Right now we are reporting about a $4.59 trillion
infrastructure demand, about $2 trillion of which has been
targeted, earmarked, some of which has not been appropriated.
We still have a $2 trillion deficit over the next 10 years.
This is really critical, that we start getting this right. We
are hopeful. We hear of what President Trump has laid out. We
need to make those statements turn into real action.
As far as hydropower goes, we have quite a few
recommendations we would like to offer up. I represent a
utility that has got 13 hydro plants as well as a pump storage
facility, so we take advantage of that technology.
To talk about age, our dams are 99 years old. So we are
talking about some pretty old infrastructure here that we care
and maintain and have done so successfully. We do that under
licensure with FERC that requires us to do inspections, so our
power dams are fairly well taken care of. We need to continue
that process and take advantage of technology.
Importantly, we need to fund, fully fund, dam safety
programs. These are really critical to the operations of our
facilities both at Federal and State levels. We need to
continue that funding. We have got some activity going on to
get that funding appropriated, both on hydropower and
nonhydropower dams. That needs to continue forward. Our safety
is really critical. Most of these dams now support or protect
people downstream.
Whereas dams supporting hydropower are regularly inspected,
like I mentioned, we still have this challenge of operating
licensure, and we have challenges with respect to relicensure
that are, in our case, many times duplicate or sequential as
opposed to being collaborative, and that is really causing
trouble because of the timelines it takes for us to get
projects approved.
In reality, since 1950, there have only really been four
significant dam hydropower project issues that have taken
place, most of which are dam-related and not hydropower-
related. We need to continue our investment in economical,
reliable, acceptable hydropower. It is critical to the Nation's
infrastructure, as has been pointed out by others, and we need
to continue looking at it from a visionary point of view.
There are technologies out there now that are enhancing
fish/habitat survival, that maximize water use efficiency, and
improve discharge water quality. We need to tap those and
continue to protect our environment. We are really supportive
of the sustainability concept here.
We also have technology, like lidar and drones and things
like that, that can really be used to avoid problems going down
in the future, and we think that successfully implemented will
add to the base of the case to build more hydroelectric.
Research that directly supports reducing capital costs,
improves efficiency and impact indication are important.
Michigan State University is actually doing some work in our
State to help in that regard, and HydroNEXT by the Department
of Energy also defines some great things going on there.
We should look at prioritizing some federally owned dams.
We think there are areas where that could be a benefit, where
private-public relationships can be used to maximize the
benefits and minimize the costs, and then also reduce the
impacts on environment. Newer technologies like hydrokinetic
are great as well. We need to keep focusing on that.
Legislation that purely focuses on improving hydropower
licensing, it certainly is troublesome. And when we talk about
the Hydropower Regulatory Efficiency Act of 2013, streamlining
that, working on Order 2002, we need to look at that. We need
to avoid having duplicative FERC and Army Corps of Engineer
Section 408 permitting. It doesn't make sense. It just takes
tremendous time.
Our best opportunities for hydropower are where you have
existing nonpower dams, we have talked a lot about that, or
closed loop pump storage, where it makes sense, where we can
align with population mode centers, market pricing.
We are really driven as a utility to focus on what makes
sense for our customers as well as being regulated by the
State. It is a tough box to fit into, so it is a challenge.
We, as consumers of energy, support hydropower. We are also
a very sustainable organization. We are trying to do our best
for our ratepayers, and that is a real primary focus for us
going forward, competing against other forms of renewables and
fossil fuels.
Lastly, we need a national energy policy that works. We are
really struggling making decisions that make sense from a
corporate point of view.
Thank you.
[The prepared statement of Mr. Hookham follows:]
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Mr. Upton. Thank you.
Mr. Steindorf.
STATEMENT OF DAVE STEINDORF
Mr. Steindorf. Chairman Upton, Ranking Member Peters, and
members of the committee, my name is Dave Steindorf, and I am
the special projects director for American Whitewater. And I am
testifying on behalf of the Hydropower Reform Coalition. The
HRC is made up of more than 160 regional and local
organizations with a combined membership of over 1 million
people who work to restore rivers impacted by hydropower dams.
I have over 20 years of experience working on hydropower
relicensing. During this time, I have been directly involved in
the license implementation and relicensing of over 20
hydropower projects in California. My first relicensing was on
PGE's Rock Creek and Cresta Project on the North Fork Feather
River. At that time, I was teaching high school economics, had
long been an avid fly fisherman, and had recently taken up
whitewater paddling. I didn't know anything about the process,
but I knew that I wanted to help restore the river.
Before this project was built, the Feather was amongst the
best cold water fisheries on the West Coast and a tourist
destination for anglers around the country. Afterward, the
river became a collection of stagnant ponds connected by a
small trickle of water. The project's operations reduced the
river's flows to just between 5 and 10 percent of what they had
been, devastating the fishery and the local economy.
Through the relicensing process, we restored flows to 30
percent of their historical average. The result is that we are
on our way to restoring this section of the North Fork Feather
River as a robust recreational and economic resource.
The reduction in power production to make this happen was
just 6 percent. From my perspective as a ratepayer and as a
river enthusiast, the benefits gained are well worth the cost.
To be clear, getting to these types of positive outcomes is
not easy. FERC relicensing requires collaboration and
engagement from all stakeholders. Given that hydropower
licenses last for 30 to 50 years, it makes sense to take the
time to get it right.
There are two key elements that lead to positive outcomes
in relicensing. First, start with a process by collaboratively
developing studies about the river and the project. That is
what the intent was behind FERC's integrated licensing process.
The information collected informs stakeholders as they make
challenging trade-offs between resource protection and power
generation. Federal, State, and tribal agencies request these
studies in order to fulfill their statutory obligations, but
often these are denied by FERC or the licensee. Often, studies
are standard elements of successful relicensings. States in
particular are then forced to wait until FERC has completed its
process to request information they need to comply with State
law, leading to delays that last years.
The HRC recommends two solutions for this problem. First,
we recommend that at the beginning of the process, FERC include
resource agency studies requested in its study plan. Second, we
recommend that FERC and other agencies develop a memorandum of
understanding to improve coordination throughout the process.
Second point. It is critical that resource agencies be
engaged during the relicensing process and implementation. In
my experience, when Federal agencies are involved with the
design and construction of recreational infrastructure, these
projects come in on budget and on time. When they aren't, the
opposite is the case. Efficiencies are gained by having local
land managing agencies that are fully engaged rather than
projects being managed from DC.
Additionally, FERC's mandate is in energy production and
has limited expertise in fisheries, recreation needs, tribal
concerns, or State water law.
Additionally, we request that Congress evaluate allowing
licensees to pay a portion of their relicensing fees that they
now pay to FERC to the land managing agencies for the direct
cost of implementing their license conditions.
Finally, I want to make a quick point about the future of
hydropower in the context of shifting energy markets. As
renewable energy technologies continue to increase, it no
longer makes sense just to focus on generating more electrons.
As highlighted in DOE's Hydro Vision report from last year,
hydropower's primary value is in its ability to regulate the
grid. Often this can be done by maintaining or improving
environmental or recreational values.
To this end, FERC can improve their analysis of license
application to better quantify grid regulation capabilities. It
is this type of smart operation, combined with environmental
protection, that are the future of hydropower.
Thank you to the committee for this opportunity, and I will
be happy to answer any questions.
[The prepared statement of Mr. Steindorf follows:]
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Mr. Upton. Thank you very much.
Ms. Swaminathan.
STATEMENT OF RAMYA SWAMINATHAN
Ms. Swaminathan. Thank you, Chairman Upton, Congressman
Peters, members of the subcommittee. Thank you for the
opportunity to testify before you today on this important
topic. My name is Ramya Swaminathan, and I am the CEO of Rye
Development, a member of the National Hydropower Association.
NHA is a nonprofit national organization dedicated to
promoting clean, affordable, renewable U.S. hydropower. NHA
represents more than 220 companies, from Fortune 500
corporations to small family-owned businesses, and I plan to
supplement this testimony with additional materials provided by
NHA.
Rye Development is a member of NHA, and we are the
developer of the largest portfolio of new hydro development
projects on existing dams in the United States. We are also
developing a 393-megawatt pumped hydro storage project in the
State of Oregon with an affiliate of National Grid. Our
conventional hydro projects are located in seven States:
Pennsylvania, Ohio, West Virginia, Indiana, Kentucky,
Mississippi, and Louisiana. All of these projects are on
existing dams, and the environmental impacts are broadly
acknowledged to be mitigable.
As this committee has recognized, hydroelectric generation
is the oldest and most reliable form of renewable generation.
The headline number for the potential for new hydropower
capacity on existing dams is compelling. There are more than
80,000 dams in the United States, and only 3 percent of them
currently have hydropower.
The benefits of this form of hydropower development include
meaningful job creation and all the associated economic
activity, and importantly, private investment into our aging
dam infrastructure, which provides structural and ongoing
operational benefits to the dam owner.
The timeline for a new hydropower development project to
reach commercial operation is between 10 and 13 years, which is
almost unmatched in the power generation space. Federal
permitting can account for 8 to 10 years of that time. And most
other energy projects can be built in less than half that time,
which means that investors in the energy space are effectively
discouraged from investing in new hydropower generation.
The Federal permitting regime for new hydropower on Army
Corps dams--and the Army Corps owns several of the best-suited
dams for this kind of development--has two major parts: the
FERC process and the Army Corps process. In our substantial
licensing experience, the FERC process takes 5 to 6 years, and
FERC recently piloted a 2-year licensing process. One of our
projects on the Kentucky River, at Lock and Dam 11, was the
only project selected for this pilot, and in May of last year
received its license, marking the successful completion of this
pilot process.
We believe that it is possible to shorten the FERC
licensing process to 2 years for a precisely defined yet
nationally significant set of projects, making this pilot
process more broadly applicable.
Next, to the Army Corps process. The duplicative
application of NEPA, first by the FERC during the licensing
phase and then subsequently by the Army Corps triggered by the
Section 404 permit, is a particular problem for a hydropower
development, because it affects the water quality standard,
which for a hydro developer determines the amount of water that
is available for generation and, therefore, revenue, uncertain
until the 7th or 8th year of a combined Federal permitting
process.
Some ideas we have to address this duplication include
requiring any Federal agency to adopt the NEPA analysis of
another Federal agency if it has analyzed the same project
within a certain number of years. Alternatively, we could
require that the Army Corps adopt the prevailing State
standards for water quality parameters applicable to that
particular project.
The last substantive point I want to leave you with is the
idea of public-private partnerships. These projects, new hydro
on existing dams, are an avenue for the Federal Government to
attract private capital to invest in its dam infrastructure,
offering measurable benefit to the Federal Government. The
benefits of the private investment are that it actually
reinforces the portion of the dam structure with new
construction, which is the part that the hydro developer
builds, and takes over the maintenance obligations for that
portion of the dam and typically that side of the abutment.
The Federal Government could recognize the value that
private capital brings in one of a few different ways. Some
ideas we have are providing a 20-year standard offer for the
purchase of power pursuant to published rates for these
projects, or making them eligible for low-cost financing from
programs such as the Rural Utility Service. Both of these
actions would effectively lower the cost of electricity
produced by the relevant hydroelectric project.
In conclusion, Rye Development thanks you for inviting our
testimony on this vitally important subject, and we are ready
to work with you further to resolve challenges and create
opportunities. Thank you.
[The prepared statement of Ms. Swaminathan follows:]
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Mr. Upton. Well, thank you all. Thank you all for your
testimony.
I want to start off my 5 minutes. We are each going to do 5
minutes of questions, and bounce back and forth.
Ms. Swaminathan--I don't quite have that right, but I am
trying--you referenced the 2-year process, the 2-year pilot
program. And, of course, that was actually legislation that one
of our colleagues, Mrs. McMorris Rodgers, on this committee
introduced. It has worked, I think. Would you like to see it
made permanent? Maybe have each of you comment on that.
Ms. Swaminathan. Absolutely. And, yes, I think it is our
belief that the process worked very successfully, and we would
like to see it adopted to a more broadly applicable set of
projects, still with certain criteria that would separate them
for projects that legitimately should be analyzed over a longer
period of time.
Mr. Upton. Right. And when you talk about the average is 10
to 13 years to get a project from start to finish, that
includes the 2-year pilot project, right?
Ms. Swaminathan. No. So our experience has been that FERC
licensing typically takes 5 to 6 years. So when I say 10 to 13
years, I am including our average, not our exceptional 2-year
licensing experience.
Mr. Upton. You also talked about the NEPA changes that
would be helpful. Have you found in your seven States that you
are working on that the Corps of Engineers is sort of
interested--I have a meeting with my Corps of Engineers later
this afternoon in Michigan--have you found that the Corps of
Engineers has been particularly helpful in working with FERC as
relates to relicensing dam applications?
Ms. Swaminathan. Right. So our experience is in licensing
new projects. And the Corps and the FERC have recently entered
into an MOU, which is a step in the direction of constructive
engagement. We welcome that.
However, from our perspective, the combined Federal
permitting process is still not right-sized, even accounting
for legislative and administrative changes such as the MOU, and
the water quality standard in particular is a particular point
of pressure for hydro developers on new dams.
Mr. Upton. Mr. Steindorf, do you have a comment?
Mr. Steindorf. Yes. So one thing that is interesting about
this, if they are reviewing the 2-year process, it also seems
to me that, what I have heard from a number of developers, is
the big challenge here is actually hooking their projects up to
the grid. There is a pump storage project in California from
Sacramento Municipal Utility District, they had an approved
pump storage project that they were ready to build, but our
understanding in talking to SMUD was that it was the $100
million price tag of hooking that project up to existing
transmission.
So some type of process whereby those hookup charges are
consistent across utilities would be a great place to start,
because in our discussions with developers, that is probably
the biggest impediment to bringing those projects online.
Mr. Upton. Wow.
Mr. Hookham.
Mr. Hookham. To counter that concept, we develop a lot of
projects nationally, and infrastructure like transmission is
important. We factor it in every decision we make.
To reiterate some comments that were made earlier as well,
we are doing duplicative permitting. And simply, we can't
afford to be out there 8, 10 years permitting projects. That
just can't happen. I can build a gas plant probably in 3, 4
years tops.
Mr. Upton. Two.
Mr. Hookham. So I am competing with this.
And from a rate point of view, we have to keep our rates
low, this is really critical, or it is just not going to fly.
Then I have to marry that up against regulatory pressures that
are involved with all of our decisionmaking these days.
So it is really a tough process that we really want to look
at permitting to make sure it is in the right light and we are
protecting the human life, we are protecting our aquatic life,
but we are also moving forward in doing renewable technologies
that make sense.
Mr. Upton. And the renewable issue is something that is
important to both sides of the aisle.
Mr. Connolly, you cited in your testimony the competitive
rates that you have got to have, particularly with natural gas.
So in your view, I would imagine making this 2-year pilot
project permanent would be a good thing.
Mr. Connolly. Well, for Bonneville, we are not subject to
the same licensing process that my comrades here are.
I would say on the transmission piece, we do interconnect
and provide transmission service to folks in our service
territory, and there are well-established processes for folks
to get in queue and line up for that and understand what their
costs and impacts will be.
Mr. Upton. Thank you.
I will yield to the acting ranking member of the
subcommittee, Mr. Peters.
Mr. Peters. Thank you, Mr. Chairman.
Ms. Swaminathan, I wanted to follow up on this 2-year
process. First of all, you described limiting projects that
qualify for the expedited treatment to objective predetermined
set of criteria applicable to a large number of projects in the
pilot solicitation. So what kind of projects didn't meet the
criteria that you think we should expand to have this 2-year
process cover?
Ms. Swaminathan. In particular, the pilot project
solicitation included a requirement that there be a letter from
the dam owner saying that the project was feasible, and there
were a number of dam owners, including Federal dam owners, who
did not want to provide such a letter so early in the process.
So our view is that the kind of criteria, objective
criteria that could be applied that would be useful in limiting
the projects to appropriate ones and yet opening them to a
nationally significant number would be criteria such as
projects on existing dams, no change in storage, no material
change in hydraulic regimes, that all studies should be able to
be performed in one season, and that it be accompanied by some
off-ramps, because sometimes it does happen that you start a
project and something unexpected is either found or experienced
in the process of studying the project.
Mr. Peters. Is feasibility generally an objective
determination?
Ms. Swaminathan. I think there was some uncertainty about
the intent behind the word ``feasibility.''
Mr. Peters. You mentioned also that NEPA is triggered by a
water quality issue. Can you explain that to me, a second NEPA
process?
Ms. Swaminathan. Yes, absolutely.
So the developer, when you are developing a new hydro
project, first goes through the FERC licensing process, by
which FERC staff applies NEPA, and there is a water quality
element to that analysis. In addition to the FERC's analysis,
the developer is also simultaneously going through a State 401
water quality certification, without which the license cannot
be granted.
Subsequent to that, the developer will have to apply for a
404 permit, which is for dredge and fill activities, and that
triggers NEPA again, this time by the Army Corps.
Mr. Peters. But we could require that the previous document
cover--or studies cover the 404 permit.
Ms. Swaminathan. I think there are a number of ways to get
at the same result. From a developer's perspective, the issue
is the duplication and the potentially different result you get
from a second process.
Mr. Peters. Different participants, different commenters,
yes.
Ms. Swaminathan. Potentially different studies being
required, and therefore more money, more time, and more
uncertainty.
From a developer's perspective, when you are leveraging
private capital, a short, certain process is best; a long and
certain process is financeable; a long and uncertain process is
really not attractive.
Mr. Peters. I have a sense that Mr. Steindorf is on to
something when he says get everyone in at the same time and
conduct an upfront assessment of what the issues are. You are
suggesting that the FERC process could be condensed to 2 years.
Is there any way you could see that the entire process for the
Army Corps could also be concurrent to that, or does that have
to follow?
Ms. Swaminathan. I think the primary barrier to concurrent
processes at the FERC and the Army Corps is a commercial
barrier, which is that typically the Army Corps analysis
happens at a higher level of engineering design, at 60 percent
and 90 percent, which in the case of a hydro project is
extremely expensive. Licensing is expensive, but final design,
which includes the ordering of equipment, major equipment, and
final engineering design, is even more expensive.
So, typically, an investor will want to have the certainty
of knowing that a FERC license is either attainable or has been
attained before committing to invest to get to the 60 percent
design or 90 percent design mark.
Mr. Peters. So you have given us some important testimony,
all of you, with respect to the obstacles to developing new
hydro, and those of us who would like to see more clean power
should take this as a challenge. And it is bad news for us if a
gas plant can be comparably permitted in a 2-year period and we
are looking at this being 10 years, the power that we want is
at a disadvantage.
So I would like to--I am not going to be able to do it in
my 5 minutes--but I would like to work with you all to see what
we can do to achieve high standards in regulation to make sure
that we cover the issues like the ones that Mr. Steindorf
raised with respect to resources, but that we get these
decisions made quickly. And that will also help attract more
private capital to these projects as well. So consider me on
that team, and I will look forward to working with you. Thank
you very much for you being here today.
And, Mr. Chairman, I will yield back.
Mr. Upton. Thank you.
The Chair will recognize Mr. Long for 5 minutes.
Mr. Long. Thank you, Mr. Chairman.
And, Ms. Swaminathan, you mentioned earlier that there are
87,000 dams in the United States, but only--or I think your
number was 80,000--but only 3 percent of the dams are fitted to
generate hydroelectric power. I have a couple in my district.
On the 2016 report from the Department of Energy, they
recommended that we look at utilizing these nonpower dams for
hydropower generation, which sounds like what you do. What are
some of the challenges to this approach? Is it technology
driven, is it cost, is it licensing process? What are your
challenges?
Ms. Swaminathan. Thank you for asking that question. It is
very important.
I think we approach it from the perspective of how do we
attract capital to the field of developing new hydropower in
existing dams. And from an investor's perspective, as a number
of participants have said today, the choices effectively
disfavor hydropower, and it is because of a variety of things
when you look at the entire playing field. It is partly because
of the FERC licensing process, it is partly because of the Army
Corps and the duplicative action of NEPA, which lends itself to
a combined Federal permitting cycle that is difficult and
uncertain in terms of its financial challenges.
And then the last part of what I wanted to leave you with
was the substantive point I made at the end, which is the
recognition of the public-private partnership, where there is a
benefit being added to Federal infrastructure that could be
recognized and supported by the Federal Government.
Mr. Long. OK. Thank you.
And Mr. Hookham, could you discuss the complexity of the
licensing and relicensing process for hydropower dams, and how
long does the process take?
Mr. Hookham. Yes. It is really dependent on lots of
factors. If it is a high hazard dam and it is in an area that
needs to be revisited in a more detailed fashion, it may take
longer. And if there is more interest in a particular habitat,
like if we find something that is living in the reservoir
upstream that is a protected species, it may take a different
strategy.
Effectively, we have repermitted our hydros as a group, and
it was more effective for us to do this in a singular step, but
it still took a long time, and it is a difficult process.
I don't have a definitive timeline for you. I will say that
since we have a built asset that is existing, generating
electricity, it only makes sense for us to try to preserve it
if we can. It is an economical decision, it makes sense to us.
It is an existing resource that is renewable. So we look at
that very strongly against other alternatives.
At the same time, we are very market driven, and so if that
cost to relicense that dam is just not effective, or if there
is a sustainability issue, if there is an environmental impact
that we don't like, we are going to turn our heads and go a
different direction.
It is a simple investment decision. If it is more certain
and more schedule certain to build something different, we will
build it. And if it is better for our ratepayers and better for
our citizens in Michigan or wherever we are building, that
makes a lot of sense.
Mr. Long. This question I can ask of either of you, Ms.
Swaminathan or Mr. Hookham. The American Society of Civil
Engineers' 2017 Infrastructure Report Card notes that many dam
owners, especially private dam owners, find it difficult to
finance rehabilitation projects, as you were talking a minute
ago. Could you discuss how the Federal grant program can be
utilized to address dam deficiencies? And that is d-a-m on dam
deficiencies.
Mr. Hookham. So, probably the simple answer is, because we
are a private investor looking at investing in building
hydropower at that dam, we can come in and revisit all the
maintenance needs, its age, its risks, its perspectives, and
invest. When we build the hydropower, typically we will work
with that private owner. Whether it is a Corps dam or Bureau of
Reclamation, whatever it is, if we are building infrastructure
at that dam, we can reconstitute it effectively back up to
today's standards.
It is a strong benefit for everybody. Everybody wins in
that scenario, the risks are reduced, the people that live
downstream will have higher confidence that that infrastructure
will last longer, and everybody, theoretically, even the
ratepayers win, because it is a cost-effective addition.
Ms. Swaminathan. I agree with that.
Mr. Long. You are OK with that?
The report also states that innovative approaches to risk
management have the potential for seeing the cost of
rehabilitation go down. Could either of you expand on what
these approaches are and the extent to which they could lower
rehabilitation costs?
Tag. You are it.
Ms. Swaminathan. I am not a dam safety expert.
Mr. Hookham. Yes. So dam safety, emergency action planning,
all those things are benefited by that process. And so
investments through grants and things of that nature----
Mr. Long. OK. And, Ms. Swaminathan, how many of these have
you done where you convert them to hydropower?
Ms. Swaminathan. We are pursuing 23 projects.
Mr. Long. Twenty-three. And, again, 80,000 to 87,000,
depending on who is counting, dams, only 3 percent now are
fitted to generate hydropower power.
Ms. Swaminathan. Yes.
Mr. Long. And you are doing how many again?
Ms. Swaminathan. Twenty-three.
Mr. Long. What is the world out there? How many do you
think could be converted?
Ms. Swaminathan. Even discounting half of the 80,000 to
87,000, that is essentially an unbounded supply set.
Mr. Long. Isn't it extremely difficult to go in and take a
dam that is not--wasn't hydropower in the first place? Is that
what we are talking about?
Ms. Swaminathan. Yes. So, a nonpower dam that was built for
another essential purpose, navigation, drinking water.
Mr. Long. Right, yes, but you think half of them could.
Ms. Swaminathan. We haven't looked in the detail to support
that, but, you know, I think there----
Mr. Long. I know, but----
Ms. Swaminathan [continuing]. Is a significant universe
of----
Mr. Long. This is Washington. We are doing ballpark guesses
here.
Ms. Swaminathan. Yes.
Mr. Long. OK. OK. If I had any time, I would yield it back,
but I don't.
Mr. Murphy [presiding]. Thank you. I recognize Mr. Pallone
for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman.
Based on what I have heard from our witnesses today, it
seems that many of us can agree that there is room for
improvement in the hydropower relicensing process. The
licensing landscape has drastically changed in the time since
many of our Nation's hydropower dams were first constructed,
and landmark environmental laws have since been passed altering
the framework by which these projects are licensed.
I don't want to see this process drag out unnecessarily,
but I do feel that there are important natural resource
considerations that must be reviewed and adequately satisfied
before a dam is given the stamp of approval to operate for
another several decades. And one of my main concerns during the
licensing and relicensing process is ensuring appropriate
consultation with Native American Tribes. Hydropower dams have
a legacy of great impact on tribal communities, and it is
critical that Tribes have a voice in the licensing and
relicensing process.
So, Mr. Steindorf, I wanted to issue a couple questions.
You discussed a proposal to grant Tribes conditioning authority
whereby Tribes themselves would protect their resources rather
than the Department of Interior. I understand this model is
used under the Clean Water Act. Can you give us more detail
about how it would work and why it would speed up the
relicensing process?
Mr. Steindorf. Well, in our opinion, we think that Tribes
having direct knowledge about the lands that they have out
there, they can provide an important voice within the
relicensing process. And it really only makes sense to give
them the same statutory authority that other agencies have,
given their particular knowledge and interest in those lands.
Mr. Pallone. Right. And then you--well, let me mention
this. The integrated licensing process, or ILP, was created by
FERC as a reform to address problems resulting from lack of
communication and coordination amongst various State, Federal,
and Tribal organizations involved in the licensing and
relicensing process. However, my understanding is that most
licenses, as many as 90 percent, according to FERC, continue to
choose the traditional license process.
So, in your opinion, why hasn't the creation of this
process, the ILP, been more successful? Why have licensees
continued to prefer the traditional process? What can be done
to improve the ILP?
Mr. Steindorf. I can't really speak to the reasons why
licensees are choosing to use the traditional licensing
process. That would be a question for them. I do think that the
ILP has offered significant improvements in the licensing
process by setting a set schedule that all the stakeholders
know when their homework is due and how they have to get it
done.
But let's be clear about licensing and why it takes a
while. A project that I recently completed covered an area 30
percent larger than the State of Rhode Island. These are huge
projects covering multiple stream reaches, multiple dams.
Getting the information that you need necessary to evaluate
what should happen in each of those individual stream reaches
takes a significant amount of time. It is important to get it
right. And the idea that we are somehow not using our time
effectively is simply not accurate.
I also think that I would like to reiterate some things
that were said up here about other projects, particularly Corps
projects.
We support, as our other witnesses did, having the Corps
deal with their own process and really getting FERC out of that
jurisdiction. Ann Miles also said that from FERC last year in
her testimony, and that is certainly something that we support.
And the last thing is I think we do need to look at power
production, particularly renewable power production as a whole
and how hydro fits into that. Last year alone--or, I just read
a report yesterday--wind power this last year surpassed
hydropower in terms of its total installed capacity. In the
last 6 months of last year, more wind and solar was brought
online than what the DOE Hydro Vision report said is
potentially capable of coming online by 2050.
So let's put the additional hydropower development
perspective in line with what is actually coming online and
being permitted. And that is happening largely because those
projects can be done with lower impacts than what we are
looking at with most hydro operations.
Mr. Pallone. All right. Ms. Swaminathan, did you want to
comment on any of this with regard to Native Americans or this
ILP process?
Ms. Swaminathan. Well, what I can say is that for our
projects we have chosen the traditional licensing process. All
our projects are original licenses, meaning they are not
relicensings, they are for new projects on existing dams. And
our choice of the traditional licensing process reflects the
fact that they were generally and broadly acknowledged to have
mitigable impacts and generally low controversy, which is one
of the criteria for choosing the TLP.
Mr. Pallone. I see. All right. Well thank you. It certainly
sounds, Mr. Chairman, like there are ways we can increase
collaboration. And I would like to talk to the Republicans more
about that. So thank you all.
I yield back.
Mr. Murphy. Thank you. I now recognize the gentleman from
Ohio, Mr. Johnson, for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman. And thanks for this
hearing, a really important hearing.
And let me start with Mr. Hookham and Ms. Swaminathan. You
know, the Federal Power Act allows FERC to issue a preliminary
permit to maintain priority of an application for a license.
The preliminary permit does not allow construction, but it
allows the applicant to study the site as they prepare to apply
for their license. While FERC has some discretion to grant
extensions for applicants acting in good faith to obtain the
necessary permits and commence construction of a hydropower
project, Congress often has to step in and waive the strict
Federal Power Act time limits. In fact, there were nine
separate hydropower extension bills that were included in the
energy conference last Congress. Unfortunately, these bills
were never signed into law.
So my question to both of you, and you can choose who goes
in what order, should Congress amend the Federal Power Act to
give FERC more discretion to extend the period of preliminary
permits and time limits for construction of a project so they
don't have to come back for congressional approval?
Ms. Swaminathan. I think the incidence of projects and
developers needing additional extensions is actually supportive
of the overall point that we are making, which is that looking
at any particular point in this process as being the problem is
probably not going to solely result in more investment in
hydropower. It is because there are multiple pain points for a
developer along the way.
So somebody gets through the rather extensive FERC process,
but then there are still challenges to face through the Army
Corps process, and then ultimately in the commercialization of
the project. And without knowing the circumstances of the
specific projects that are asking for extension, I would
surmise that one of the reasons, one of the common reasons that
further extensions are needed is because the subsequent parts
of the process are not falling into place with ease. Because
when you look at the overall process, we are not caught in a
virtuous cycle.
As to the specifics of modification of the Federal Power
Act, we would have to study that. I don't have a position on it
at the moment. But I think it supports the underlying problem
which ripples through the entire process of developing
hydropower.
Mr. Johnson. Well, let me rephrase it then. I mean
disregard the modifying the Federal Power Act. If Congress
didn't have to come back and approve the extensions, things
would move a lot faster, wouldn't they? Especially if you reach
a time limit and you wind up in a partisan situation like we so
often see here in the Capitol where you can't get the
legislation through and signed into law. Then it might be a
problem.
Mr. Hookham, do you have an opinion?
Mr. Hookham. Yes. I think maybe just to add to that, I have
heard other people mention this too, having precise
understanding going into a project, which the preliminary
permitting lets us do, lets us screen out projects that don't
make sense. And it will help us make a decision that will help
shorten the timeline.
We really need to focus on the timeline from the time we
think a project is real to the time it can get permitted to
have clarity, because that uncertainty is impossible to
finance, it is impossible to really put the resources together
to make a project like that work.
Mr. Johnson. OK. Along the same lines, FERC is generally OK
with congressional approval to relicense a hydro project that
did not begin construction within FERC's specified construction
time, assuming that the congressional relicensing occurs within
10 years of the original license issued by FERC. So a follow-on
question. In your opinion, should FERC or Congress allow that
10-year window to be extended? And why or why not?
Ms. Swaminathan. I would answer it by saying anything that
allows private capital to not perceive a cliff coming, and that
essentially is the problem, which is that you might have a
project which gets through its licensing, still has some fairly
sticky permitting to go through with the Army Corps or other
processes, and as the begin-construction-window end comes
closer and closer, that project becomes more and more difficult
to finance even though there may be nothing particularly wrong
with it. But from a capital perspective, that itself becomes a
constraint.
Mr. Johnson. I get it. And my time is about to expire. So
let me just say this and see if you agree, and it is a short
answer. Really what we need is efficiency in the entire front
end of the project. The 10-year window would be less of an
issue if we had efficiency in the permitting and the
development up front.
Ms. Swaminathan. Yes.
Mr. Johnson. Thank you. I yield back.
Mr. Murphy. The gentleman's time has expired.
Now Mr. Tonko, you are recognized for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair. And welcome to our
panelists.
I believe we all want to see more emission-free base load
energy generation added to our mix, especially if it
complements intermittent resources. But it must be done in a
way that is also respectful of other resources, ecological and
recreational.
So Mr. Hookham, your testimony states active hydroelectric
plants have a median age over 55 years old. It seems that there
is a great opportunity to upgrade performance of existing hydro
generation. Since the construction of many of these sites
decades ago, what types of advancements in technology have been
developed to most improve efficiency?
Mr. Hookham. So Consumers Energy is in the process of
relicensing and repermitting and investing in Ludington, which
is a huge asset to this country. It is a 1,900-megawatt plant
that is going to over 2,000 megawatts of pumped storage, which
gives us that energy and storage capacity.
The efficiencies we are getting are basically to push the
limits of how much water we can fit through the turbine section
to generate electricity. There are thermal limits and
mechanical limits that we are up against. But we have worked
with the OEMs, and we are working with OEMS virtually every
time we relicense a dam to see if we can get more out of that
hydro engine.
Mr. Tonko. And what is the process for putting the newest
technologies on these old sites?
Mr. Hookham. It really varies. And we try to work with the
original OEM, if they are still in business, to see what
technologies they brought to the table, using different
materials like permanent magnets or different seal materials
that can allow more efficient generation. But we will work with
whoever.
Mr. Tonko. And is there anyone estimating how much capacity
could be added by upgrading and retrofitting these older sites?
Mr. Hookham. So there is always a transmission limit that
we have to worry about. But generally speaking, if we can
generate more electricity efficiently out of a specific site,
we will do that.
Mr. Tonko. And what are the regulatory challenges to doing
these upgrades?
Mr. Hookham. So I mentioned it earlier. It is an economic
challenge for the most part, where if we invested a dollar
today in a new hydro addition or a retrofitted hydropower
plant, is that worth spending that dollar for our ratepayers
and our shareholders versus spending that dollar on something
else? We have to weigh that every time.
Mr. Tonko. Are there sufficient incentives in place to make
these investments economically worthwhile?
Mr. Hookham. It is a long answer, unfortunately, but yes.
Mr. Tonko. OK.
And Mr. Steindorf, generally speaking, do retrofits have a
smaller environmental impact than new constructions?
Mr. Steindorf. We typically support retrofits on existing
projects, certainly as opposed to building new ones.
I personally have been involved in a number of retrofits on
some existing licenses that I have worked on. And we have
worked with various utilities, including Pacific Gas and
Electric Company and others, to not only see that those
projects get retrofitted, but also to see that they are
eligible for a renewable energy credit.
Mr. Tonko. Thank you.
And Ms. Swaminathan, when you put power generation on an
Army Corps dam, what responsibilities do you inherit? In other
words, do you pay, for instance, for dam inspections or
maintenance? What are some of those responsibilities?
Ms. Swaminathan. So the Army Corps maintains responsibility
for dam safety, and they have a fairly developed program. We of
course participate in that program and are subject to all its
conditions.
The developer typically will take maintenance
responsibility for the portion of the dam that is the new
construction up to the point of tie-in. Maintenance
responsibility including for erosion, sedimentation control on
the abutment side that adjoins the new construction. A lot of
debris and trash handling is handled through the hydro project
and its trash racks and debris handling mechanisms. And, of
course, there are upgrades to existing facilities or
potentially new facilities, typically recreation, that are
associated with projects.
The last point I will make is the applicant or the
developer also typically will provide electricity to the dam
facility itself.
Mr. Tonko. OK. And I take it that partnership works rather
well?
Ms. Swaminathan. Yes.
Mr. Tonko. Great.
And for the 2-year licensing process to work as intended,
how important was it to provide all the necessary info and
study requests at the beginning of the process?
Ms. Swaminathan. It is important for all sides to have a
clear understanding of what both is needed, the characteristics
of the existing condition, the characteristics of the proposed
condition, and to adhere to timelines that are clear to all
involved. So we would be supportive of a process that included
all that.
Mr. Tonko. OK.
Mr. Chair, I will yield back.
Mr. Murphy. Thank you. The gentleman yields back.
And I will recognize myself for 5 minutes.
So I wanted to ask you about your project because you have
one near my district. In Charleroi, Pennsylvania, a lock and
dam is being rebuilt. These dams are over a century old. As I
watch it being rebuilt early on, we would note that the lock
was so old that when water went in and out the concrete shifted
a little bit. So it is much more stable.
And so Rye Development is developing this conventional
hydropower plant in Monongahela Lock & Dam number four in North
Charleroi, Washington County. I was just reading over some of
the list of permitting. It is pretty massive, as it should be.
This is a big project.
But I am curious here, the timeline for hydropower
licensing, how does that compare to acquiring permits for
example for other renewable energy projects like wind and
solar? And what benefits does hydropower have to offer that may
be complementary to other renewable energy resources?
Ms. Swaminathan. That is an important question.
So, relative to other renewable resources, and even
relative to other fossil resources, hydropower generation's
permitting cycle is almost unmatched. So you can put up a solar
project in 9 to 12 months, a wind project in maybe 2 to 3
years, a gas plant in probably a similar timeline, 2 to 3
years. And a combined permitting process for non-Federal
hydropower on Federal facilities is close to 10 years. It is
between 8 and 10 years. So that disparity in timelines
effectively discourages investment into non-Federal hydropower
development.
And to answer the second part of your question, the
importance of hydropower, certainly it is a clean, renewable
form of generation, it has associated job creation and
associated economic impact. And we talked about public-private
partnerships and the potential for these projects to bring
benefits to the dam owner.
But in addition to that, and I believe a number of parties
here have spoken about it today, hydropower adds a significant
amount of reliability and stability to the grid, which actually
also benefits intermittent sources of power such as wind and
solar. And that needs to be recognized.
Mr. Murphy. Let me read over some of these things with this
permitting process. I am reading here from the Pennsylvania
bulletin alone, is that we are dealing with ``discharge
permits, erosion and sediment control permits, water
obstruction encroachment permits, submerged land license
agreements, water resources planning and registration, limited
power permits, water quality monitoring, preparedness
prevention and contingency plans, operations inspections,
transfer projects, correspondence''--they even tell you who you
have to write to. Quite a few things there with that. And you
said in your testimony that there are redundancies--that was
just some of the State ones, too--between the processes that
happen with FERC, Army Corps of Engineers permitting. And you
suggested NEPA should only be applied once during the
construction.
So can you get at some details of this as to how, on an
Army Corps of Engineers-owned dam, how would that Federal
permitting process benefit with less duplication?
Ms. Swaminathan. I think it could be streamlined and
increase coordination among all the participants. It would
certainly benefit the overall timeline and bring investors to
the table to invest in this sector. But I think it also would
benefit some of the stakeholders who are going through some of
the these duplicative processes and going through multiple
permitting processes for the same project in having to review,
comment, and provide studies and study requests multiple times
along the process.
Mr. Murphy. It is fascinating to me because through that
lock and dam passes millions of tons of coal. There is a barge
manufacturing company just upriver that sends barges downriver.
We have natural gas. And so the supplies for fracking go
through there, so it is really quite an energy hub.
Do any of the panelists--perhaps I will let you speak on
this--but, given that many American dams have exceeded their
design life, where do you see modernization fitting in with
regard to the President's plan and discussing infrastructure
development and the private sector? Anybody want to comment on
that?
Mr. Steindorf, go ahead.
Mr. Steindorf. Again, I think it is really important to
recognize the importance that we have seen with hydropower,
which is its grid-regulating capability. So, increasingly, we
are in a situation where, believe it or not, we are awash in
electrons out there. Curtailment of wind and solar projects in
California is becoming a reality. And those developments,
again, are happening across the United States, with Texas and
Oklahoma leading the way in wind, and places like California
leading the way in solar.
It is not a question of enough energy out there, it is how
do we regulate the grid. So really specifying and using hydro
to its highest potential, rather than really specifying that we
want to have more base load generation, I don't think that is
what we actually need at this point.
Mr. Murphy. I know many in that area who think the EPA's
regulations, they shut down two power plants within a few miles
of this one being proposed down there. Put a lot of people out
of work. But you are right, we need to find out how we
modernize the grid and be more efficient with that.
But I see my time is up. And next is Mr. Schrader. You are
recognized for 5 minutes.
Mr. Schrader. Thank you very much, Mr. Chairman. I
appreciate the panelists for being here. A great group to get
some insight from.
Mr. Connolly, I want to thank you and BPA for doing such a
great job of providing low cost power to the entire Pacific
Northwest, and a great regional compact that I think other
areas of our great country would like to emulate. We are very,
very fortunate. And I want to thank you for the great work that
you do.
We spend a lot of money making sure that we meet our
requirement to make sure there is equal consideration to fish,
wildlife habitat preservation on our dams. You guys spend a lot
of money. How much money do you spend for fish protection and
restoration right now in the Bonneville footprint?
Mr. Connolly. Thank you, Mr. Schrader. About 30 percent of
our rates go into our fish and wildlife mitigation program. And
then there is also another fraction of the Corps' and Bureau's
O and M costs that is tougher to break out. You could say
probably over a third of our costs are related to fish and
wildlife.
Mr. Schrader. Wow that seems like a pretty high number. Is
that common through most utilities and power generating
facilities, they spend that much on mitigation of habitat and
wildlife?
Mr. Connolly. I would have to defer to the other folks here
about fish and wildlife costs that they face. We do believe
that we have one of the largest programs in the country, if not
the world.
Mr. Schrader. Is the ratepayer aware of how much of their
rates go toward--30 percent of the rates they pay go towards
that?
Mr. Connolly. I know certainly our power customers are
aware, and I believe they talk to their ratepayers about it.
Mr. Schrader. I don't see it on my bill. I guess I would
like to see it on my bill. Some would like that. Maybe that is
a huge success that you are spending that much money. And we
are getting some success, aren't we, as I recollect. Fish
passages, especially downriver, what is it now?
Mr. Connolly. Certainly, we feel like we have made
significant progress under the programs we have in place to
have survival of juvenile fish moving past the dams and
returning. Just last week, the Federal agencies released a
comprehensive evaluation on our progress for salmon and
steelhead that we think shows significant progress that we are
making in the area.
Mr. Schrader. I heard some figures, at least the fry going
downriver are some 90-plus percent survival rate. Is that
accurate?
Mr. Connolly. That is right. It depends on the species, but
yes.
Mr. Schrader. Sure. I would call that a success. I am
surprised that we are having problems getting our biological
opinion through a certain judicial group here in the great
Pacific Northwest. That would seem like an unqualified success.
Wouldn't you agree, Mr. Steindorf, having that sort of passage
downriver is pretty good for an anadromous stream of that
caliber.
Mr. Steindorf. Anadromous fish passage is good. I believe
we support that. But let me give an example from my testimony.
The Rock Creek-Cresta Project that I first started working on,
back in 1947 the U.S. Fish and Wildlife Service recommended a
minimum instream flow of about 400 CFS on that project. Because
there wasn't the equal protection clause in the Federal Power
Act, the ultimate flow that they ended up deciding on was 50
CFS for one project, 100 CFS for the other. As I said in my
testimony, it completely devastated that river and that
recreation economy.
Mr. Schrader. I have short time. I am sorry. You also said
you were able to restore a lot of that. It adds to your credit
and the work you did. And I think Bonneville and many others
are working along that line.
Can I switch to Ms. Swaminathan? I am sorry. I had to step
out. You talked, I am sure, about your pilot project and the
success you had. What agencies objected to the shorter
timeline? What outside groups were upset with what you did?
Ms. Swaminathan. It is good to see you again, Congressman.
Actually, we had no objections. So I think one of the successes
of the 2-year process was that the stakeholder agencies bought
in. And it was an extremely collaborative process.
Mr. Schrader. So for certain projects that are very
contained, that don't have the fish passage issues maybe that
we were maybe just talking about, there certainly seems like
there is an opportunity, if no one objects, to a shorter,
clearer, nonduplicative timeline.
Ms. Swaminathan. That has been our experience.
Mr. Schrader. Very good. Very good.
Back to Mr. Connolly. In your testimony, you talk about
concerns with regard to scheduled investments and not being
able to recoup opportunities in those areas. Could you
elaborate a little bit on that?
Mr. Connolly. Well, certainly with the litigation that we
face currently, there are motions for injunctive relief to stop
investments in a number of the dams. And we are concerned about
those from a reliability, safety, and in fact environmental
performance of the facilities. Loss of generating equipment in
an uncontrolled manner presents all kinds of----
Mr. Schrader. What would that do to the ratepayers
potentially?
Mr. Connolly. Well, certainly stopping that work would
have--needing to cease capital projects would force us more
than likely to have to expense those costs. So that would be an
immediate hit to ratepayers, in addition to the lost generation
that would occur from having units out of service.
Mr. Schrader. Great. Thank you all very much.
And I yield back.
Mr. Upton [presiding]. Thank you. Mr. McKinley.
Mr. McKinley. Thank you very much, Mr. Chairman. I am
sorry, I missed a lot of the testimony because I was upstairs
in another one, another meeting on this. I heard some of the
comments. And when I read Ms. Swaminathan--am I close?
Ms. Swaminathan. Yes.
Mr. McKinley. And since I arrived here, there have been
several other questions along this idea of this timeline of
approvals. And I thought I was just confused because of the
last response you made that perhaps some hydro can be shorter.
Ms. Swaminathan. Right. So I think the last question that
Congressman Schrader was asking me was about a pilot process
that FERC set up pursuant to the HREA passed in 2013, where
they were directed to have a 2-year licensing process as a
model, as a pilot to see if it was possible. There was a
solicitation, and our project on Kentucky Lock and Dam 11 was
the only project chosen nationwide to be in that pilot process.
Mr. McKinley. So have the projects that you have in mind in
Morgantown, Cumberland, and----
Ms. Swaminathan. Opekiska.
Mr. McKinley. Opekiska. How long have they been in the
pipeline?
Ms. Swaminathan. So we are awaiting licensure on Opekiska
and Morgantown, and we have been working on those projects
since 2010 to 2011.
Mr. McKinley. So it has been 5 to 6 years.
Ms. Swaminathan. Yes.
Mr. McKinley. It just begs the question. Everyone in
Washington is interested in renewables. Why something like
hydro would go 7 to 10 years or longer, as compared to solar
and wind? I don't think you kill any birds, do you? OK. And I
don't think you create any sound problems that people have with
wind. Personally, I love wind. And I am fascinated with the
solar panels. But I don't know why the hydro facility would
take so long.
So can you give me some perspective on why you think
government drags out the permitting for hydro facilities?
Because surely they understand the impact they have on--
eventually they are going to approve them, and they have an
impact on people's economy in those communities. Look at what
is happening to Martinsville. They were able to build a new
courthouse and school building down there. Why is this?
Ms. Swaminathan. Absolutely. We couldn't agree with your
question more. I think it points to the need to modernize a
process that is potentially antiquated and does not distinguish
between projects that have potentially legitimate issues or
need analysis that spans many years.
But the kinds of projects that we work on, including
Morgantown and Opekiska, by and large have relatively limited
impacts, both hydraulic and terrestrial. The physical footprint
is very small, and the hydraulic impacts are very limited. And
I think that is fairly broadly acknowledged, as evidenced by
the fact that typically stakeholders in our licensing process
don't generate a lot of controversy. I think there is a fair
amount of collaborativeness in the process. However, it does
stretch out for a very long time.
Mr. McKinley. Joe Barton and I are the only two licensed
engineers in Congress. So this is something that I have been
fretting with for 40-some years in my practice in engineering.
And that was why our dams, our low head dams, why we are not
using low head turbines on every one of them.
So is it bureaucracy that is holding it up? Why don't we
have more?
Ms. Swaminathan. Well, we don't have more of these across
the board because when you look at the entire playing field for
new hydro development on existing dams relative to other
generation sources, investors look at this playing field and
the timeline and the fact that the risks are not sequentially
taken off the table effectively discourage investors from
investing in hydropower.
Mr. McKinley. So in the 50-some seconds, what would be the
first step you would take to shorten the timeframe?
Ms. Swaminathan. So I think in terms of the FERC licensing
process it is possible to adopt that pilot 2-year process, with
some cleanups and tweaks, to be more applicable to a precisely
defined but nationally significant group of projects and make
that more applicable.
All of these projects, including Morgantown and Opekiska,
on Federal facilities, on Army Corps facilities go through
additional permitting by the Federal Government at the Army
Corps. And some part of that is absolutely essential. But there
are parts of that process that are duplicative, and
importantly, from private capital's point of view, leave
unresolved very important parameters until very late in a
combined permitting cycle.
And finally, I think there is space for the Federal
Government to recognize the value of public-private
partnerships, because these projects are ways to bring private
capital to invest in our aging dam infrastructure.
Mr. McKinley. Thank you very much. I yield back.
Mr. Upton. The gentleman's time has expired. The Chair will
recognize the gentlelady from Florida, Ms. Castor.
Ms. Castor. Well thank you, Mr. Chairman. Thank you for
calling this hearing. And thank you to our hydropower experts
for being here and being willing to share your expertise with
us.
Very interesting, because hydropower continues to be an
important component of how we generate electricity in America.
And I think you have heard from a number of our colleagues here
that we have got to do more to incentivize clean energy. And it
is not so simple sometimes as saying, boy, let's put all of our
eggs in one basket or not. We can't do that. We have got to
continue to be as diversified as possible.
Coming from the State of Florida, where we really don't
have hydro, we don't have a lot of dams, I am still very
interested in how we incentivize clean energy, including hydro.
Because my State, as most communities in the country, we are
facing significant rising costs due to the changing climate.
And we know we have got to do more in the clean energy sector,
including hydro.
So I have heard you all mention a number of challenges here
today, how we modernize the grid across the country and get
these clean power sources connected to the grid. I have heard
you talk about incentives and some regulatory relief as well.
Mr. Steindorf, California is often the national leader when it
comes to clean energy. You have a very bold renewable portfolio
standard. You have a wide mix of energy sources. Can you help
us prioritize a few of these from the--knowing that at the
Federal level we can put certain incentives, whether it is tax
incentives or regulatory relief or funds into modernizing the
grid from the Federal perspective, help us prioritize how we
bring more clean energy projects, including hydro, to the
benefit of consumers.
Mr. Steindorf. Well, believe it or not, you know, some of
the things that need to be done aren't actually at the Federal
level. You know, again in the hydro vision report that was put
out by DOE last year said that one of the issues is that
utilities are not properly compensated for their grid-
regulating services that they provide. Might surprise my
colleagues that I am actually advocating for the fact that they
get paid more for the services that they do provide out there.
But I think that is significant.
So, if you want to incentivize those types of projects that
actually provide those important services that allow you to
bring wind and solar onboard, which is coming onboard at,
again, ever-increasing rates, that is important, with the
caveat that we are able to do that in ways that are
environmentally protective.
I am working on a project right now in Northern California
where we have actually done that. We have done the analysis,
which again isn't an analysis that FERC typically does, where
we have shown that we can actually increase the grid-regulating
services that the project provides while increasing stream
flows. Now, that is a win-win that we should all be pursuing
out there. And there are a number of different ways we can do
that by looking at existing facilities and find ways to give
them more flexibility.
Also in my backyard is another project that PG & E, after
spending $30 million during relicensing, has just said that
they would like to hand over that project to anybody who wants
to take it. Now, part of the problem there is that that project
just doesn't have that grid-regulating capabilities.
And the other part is that, because of community preference
aggregation, utilities can no longer pass along the cost of
noneconomic projects to the ratepayer. So part of this
discussion really needs to be about what are we going to do
with those projects that are no longer economic, some of these
projects that are a hundred years old and they just don't fit
in today's energy mix? That is going to be a big situation that
we need to grapple with, because the last thing we want is to
have a bunch of outdated unused energy infrastructure sitting
the on the landscape.
Ms. Castor. So Mr. Hookham, how would you answer my
question on priorities from the Federal level on grid
modernization, incentives, tax incentives included in
regulatory relief?
Mr. Hookham. We have talked a lot about wind and solar.
They are great attributes, clean energy sources, but they are
intermittent. They don't operate all the time. And a lot of
times, as was pointed out earlier, they fluctuate quickly. We
need to have storage capability. That is a huge component. PGM
has proven that that has worked for them in their ISO grid
section that they have introduced fast frequency regulation.
That is great, because we can then ramp up quickly resources
that exist so we can bring in more renewables.
And if you look at countries like Germany, the research
they have done in other countries where they ramped up their
clean energy, they really have some stability issues going on.
And part of that is just that, there is no storage. There is no
ability to offset those penetrating intermittent renewables
that exist.
So, you know, I hesitate against saying an RPS from a
national point of view because one size fits all doesn't work
with me personally. And I think we need to look at what incents
us as a utility to build more clean energy, as opposed to
market conditions which may incent me to build more gas.
Ms. Castor. Thank you. I yield back.
Mr. Upton. The Chair would recognize the senior Mr. Barton
versus the good-looking Barton junior.
Mr. Barton. Well, I have to admit, Mr. Chairman, that he is
a lot better looking than I am, and he is a lot smarter than I
am, and he is also a lot more attentive than I am. Although as
soon as he got here, he asked how long it was going to last.
Mr. Upton. The gentleman is recognized for 5 minutes.
Mr. Barton. I appreciate that. I do want to point out, Mr.
McKinley indicated that he and I are both registered
professional engineers. I was at one time a registered
professional engineer, but I am not currently licensed. I don't
want to get the Texas State Board of Professional Engineers all
upset.
Mr. Upton. Your $125 would be good, though.
Mr. Barton. I should get on the stick and get relicensed, I
admit to that.
I appreciate Mr. Chairman holding this hearing on our
hydropower sector of the energy sector of our economy.
I have got two basic questions. My first question: Do we
have the capability still in this country to build brand-new
hydropower projects, given all the complexity of the
environmental regulations that are now in place? Anybody. Ms.
Swaminathan?
Ms. Swaminathan. Thank you.
Mr. Barton. How close was I? Not at all?
Ms. Swaminathan. Very close.
Mr. Barton. She is going to go far.
Ms. Swaminathan. I think we certainly have the technical
capability. I think what holds us back from having more
hydropower development on existing dams, the kind of
development that Rye Development does, is really when investors
look at the entire landscape, what they see is a pretty
forbidding chain of an extremely long process that leaves risks
open until relatively late in the process.
And then combined with a number of things that my fellow
witnesses have talked about, the prevailing price of
electricity, the lack of recognition for the qualities that
hydropower brings in terms of grid reliability and stability.
Those all make for a challenging business environment. But I
think when you put both of those together, if you are an
investor you have choices. And I think the collective challenge
here is to make this as an investment proposition more
attractive relative to what investors could otherwise invest
in.
Mr. Barton. I guess I will ask a more general question, and
everybody just give a brief yes or no answer. Will we ever
build another major hydropower project in the United States?
Mr. Connolly?
Mr. Connolly. That would be tough. Perhaps. Storage has
value, but it is going to be a long climb.
Mr. Hookham. There are opportunities, but it is a long
proposition, and I can build a battery storage project that can
inject faster than I can build some hydro projects, so probably
not. As an investment point of view, I don't have that
incentive.
Mr. Steindorf. And I would say with the exception of there
is some potential with pumped hydro, and as I said earlier with
the increase in wind power, which this year exceeded the entire
installed capacity for hydro, with your State leading the way,
the short answer is no.
Ms. Swaminathan. Our average project size in our portfolio
is 12 megawatts. And there are 23 projects. But obviously from
an energy perspective, those are small projects. So in terms of
major projects, the way we get to scale is to accumulate
projects in clusters.
Mr. Barton. These big wind turbines, aren't they about 12
megawatts?
Ms. Swaminathan. One turbine.
Mr. Barton. Yes. In the 2005 Energy Policy Act that passed
this committee, we, at some point in the process, tried to make
the FERC the lead agency for hydropower. We weren't able to
make that happen. But this is a new Congress.
We have a new subcommittee chairman who is very
experienced, a new full committee chairman who is a proponent
of hydropower, and a few old goats like me that are still
around. Is that something we ought to make another run at?
And again, we will just start with Mr. Connolly.
Mr. Connolly. As a Federal PMA, we are not as exposed to
FERC, so I am going to defer to the rest of the panel.
Ms. Swaminathan. So, you know, the majority of our projects
are on Army Corps dams, so we are subject to FERC licensing and
then the Army Corps processes. I think each part of the process
has some virtues and essentiality, and each part of the process
has some real challenges.
So the virtues of the FERC process, setting aside for a
moment that it is very long, are that it is clear, it is set up
as a process with clearly defined steps. FERC has some open
dockets, so you can look at other dockets and refine your game
as a developer or potentially as a stakeholder. The Army Corps
process' virtues are, for one, for projects on Army Corps dams
it is absolutely essential, to make sure that the hydropower
project doesn't interfere with the dam structure.
However, I think the Army Corps process comes with its own
challenges. It is duplicative when it comes to NEPA, it can
become opaque. It is variable across different regions of the
country and districts. And so what we would like to see is a
solution that addresses all parts of that chain with respect to
regulatory modernization.
Mr. Barton. My time has expired, Mr. Chairman. Thank you.
Mr. Upton. Thank you, Mr. Barton and Mr. Barton. The Chair
will recognize the gentleman from the great State of Michigan,
Mr. Walberg.
Mr. Walberg. Thank you, Mr. Chairman, from the great State
of Michigan.
And Mr. Hookham, good to see you here. We are proud of CMS
Energy in Jackson, Michigan, and appreciate what you provide.
In fact, I stepped out to meet with the mayor of Jackson for a
little bit here and one of his city council members.
I spent a lot of wonderful time below hydro project dams
fly fishing myself. Either Tippy dam in Michigan or the Bull
Shoals dam and hydro project in Arkansas on the White River.
And some of the greatest fish stories of my life have developed
from those spots at the end of my fly rod. But I also know that
there is a significant power potential.
And so Mr. Hookham, I would like to ask you what reforms
could the Congress undertake to help ensure that this clean
source of energy remains cost competitive in today's markets?
Mr. Hookham. I think the short answer is we need less
governance. We need maybe a more concise approach. So, if you
could find out a way to reduce or collaborate between State and
Federal and reduce the number of parties that are involved in
the process and focus it so that the parties to a license are
clearer, and they have clear objectives, and we understand
where they are headed, it will add a lot of clarity to us to
invest. Because right now the uncertainty is really a problem.
Mr. Walberg. That is the key. Anything else?
Mr. Hookham. No.
Mr. Walberg. Give me hope. Talk about getting government at
all levels to work together, that is a challenge. But I am
delighted you said that. At least it tells us where the
bottleneck is.
Mr. Hookham. The other part is the market side of it,
because we are in a situation as a regulated utility where we
buy and sell power through an ISO that was set up through FERC.
So we have an opportunity to make revenues through cost
efficient generation, but also to have to buy that power back
for our constituents. So it is a very tight market in terms of
making profits as an investor-owned utility, and at the same
time keeping our rates down, because that is really what we are
all about.
And also managing the sustainable piece of being an
environmentally friendly company. So we live in a really
difficult world. So the less wires or nooses around our neck,
the better off we are going to have a path forward.
Mr. Walberg. Good admonition. Any of the rest of you want
to add to that?
Ms. Swaminathan. I would just like to chime in on the
commercial aspects of this. We are in a different position
because we are funded by private capital, which is a different
source of capital and a different pool with different
constraints and different return thresholds than a regulated
utility.
So, certainly, we support regulatory modernization across
the whole range of regulation that we face. But low cost
financing through some of the Federal instruments that can do
that, as well as potentially a Federal standard offer that
would provide certainty pursuant to published rates would be
measures that the Federal Government could adopt that would
significantly galvanize private investment because they would
provide certainty on the market side.
Mr. Walberg. Yes.
Mr. Steindorf. One thing I was going to recommend that we
put in our testimony and that our coalition has been actively
supporting is the developing of MOUs between FERC and State
water agencies, particularly those with section 401 authority.
What we worked on and what I personally worked on in
California was an MOU that made that process happen in
conjunction with the ILP process rather than happen in series.
And this is something that we really learned after going
through a round of relicensings, where after the ROP would
finish, then the State board would take up their process.
Having those both happen concurrently is a great idea, and
really it is the way to ensure that these happen in a timely
manner. And it is a far better answer than having FERC taking
over State water law, which is something that is not supported
by the National Governors Association.
Mr. Walberg. Right. Or many of us in Congress as well. Mr.
Connolly, did you have--I saw your hand reaching out.
Mr. Connolly. I guess the only thing I was going to say is
the investment projects that we look at on behalf of our
customers tend to be very economic in the long haul. But I
would echo the comments about the current market conditions and
the ability for hydro to be compensated for the services it
does provide to the grid.
For Bonneville being a not-for-profit entity, those
benefits where they compensated, those would go back into
driving down the rates of our customers and to enable us to
continue to provide the services that Congress has asked us to
provide to the region. And so, both of those are of course very
important to us.
Mr. Walberg. Thank you.
Mr. Upton. Thank you. The Chair will recognize Mr. Griffith
for 5 minutes.
Mr. Griffith. Thank you very much, Mr. Chairman. Thank you
all for being here today.
Mr. Hookham, in your testimony you discuss the great
potential for additional development of pumped storage
hydroelectric generation on pages six and seven. In particular,
you note opportunities for these facilities at abandoned mine
sites. Representing a district in coal country in southwest
Virginia, this is welcome news.
And so we are looking for ways that we can promote economic
development in our communities and help out, particularly when
we can reuse some of our abandoned mine locations. In fact, the
Virginia Department of Mines, Minerals, and Energy had put
forward such a proposal for the Department of Energy's
HydroNEXT grant, which funds innovative projects such as this.
In particular, the sites that are being considered in southwest
Virginia are especially attractive since they use clean,
nonacidic water for use in the system. While they were not
chosen for this round of grants, I am hopeful that DOE and
other agencies will see the importance of supporting these
types of projects.
So here is my question to you, and others may want to jump
in: Can you expand on what you see as the potential for pumped
storage hydro, particularly for abandoned mine sites, and
discuss what regulatory barriers you think we need to address
to streamline these sorts of projects?
Mr. Hookham. So we are always looking to take advantage of
what we call brownfield sites, sites that were used for
something else that we can reuse for a better use. So like
landfills with solar caps makes perfect since to us, so we can
cap over and protect the environment and at the same time
generate electricity.
A mine site is a classic example where we can create
vertical head, where we have got an opportunity to use a pool
that potentially is underground, contained, not contaminating
groundwater, with a good clean source of water, and then be
able to pump that back up and reuse that power on both sides.
It makes a total amount of sense, particularly where we can
align that with demand and where the grid infrastructure
supports it.
So, in an opportunity where there is a mine site where we
have power lines and everything else aligned, I think we need
to really take a close look at this.
Mr. Griffith. Regulatory burdens or barriers that we may
need to move aside?
Mr. Hookham. I would say it is the old first of a kind
mind-set. We have to be careful what we are doing. So,
environmentally, we have to look and see if there is any
impacts, because we don't have a lot of those investments right
now.
So I think we have to do a little homework. We have to do
that prescreen to make sure it is a viable approach, but I
think it should be done right away as part of this research
mind-set we need to take on.
Mr. Griffith. OK. Anybody else want to touch on that
subject?
Mr. Steindorf. One thing that I think, again looking at the
perspective of the energy landscape, a lot has been said today
about if an investor looks at a project like this, they have to
look at what are the other alternatives. To be honest, we have
been somewhat surprised that there hasn't been more interest in
pumped storage given the need for good regulation, et cetera.
However, it needs to be said that if you are an investor
looking at other storage technologies that are being developed
right now, do you want to spend a billion dollars on a pumped
storage project that could easily be leapfrogged by some new
battery storage technology that is in the near future? I think
that is the question.
And in terms of pumped storage, we think it is possible to
site them correctly. But I think you need to acknowledge the
reality that that are other technologies that are being
developed that may be better answers.
Mr. Griffith. And then you--yes Ms. Swaminathan.
Ms. Swaminathan. If I can chime in on that, we are
developing a project in the State of Oregon, which is a sizable
pumped storage project. The challenge on pumped storage has
been on the market side, on the commercial side, which is that,
you know, the conventional wisdom is that you can arbitrage on-
peak and off-peak power.
In an environment of very depressed prices, that is very
difficult. And the capital costs of pumped storage are very
high, because they tend to be sizable projects. And so, what we
would like to see is movement on the market side. How do you
pay for pumped storage in recognition of all the grid benefits
that it gets? Not just the generation.
Mr. Griffith. I appreciate that. And then we had some
conversation earlier about the length of time in getting these
projects approved, and we do note need to cut that.
I have two dams proposed already in my district for some--
small dams, small projects, but it is taking a long time to get
everything done. And we need more time to do it. I also should
bring up that I have got a little bill coming in, because a lot
of these larger projects were sold to the public as you also
have recreational facilities. And yet FERC has been very
aggressive in some of our lakes in our areas in telling the
property owners on the size of the lakes what they can and
cannot do.
I do not know the laws of other States, but as a trained
Virginia lawyer, although like my friend Mr. Barton, I am no
longer practicing, but I think there are also some taking
issues. But one of the things I think we need to work on is
making sure that FERC considers that usage and considers the
property owners on the size of the lakes as well.
My time is up, so I am going to have to yield back. But we
will keep that in mind. Thank you so much for your time today.
And I yield back, Mr. Chairman.
Mr. Upton. The gentleman yields back. The Chair would
recognize the senior Mr. Mullin for 5 minutes.
Mr. Mullin. Thank you. And thank you for allowing me to
have my oldest son sit up here with me. It is his spring break.
I don't know why he would rather come here than Disney World,
because his other siblings went to Disney World. You didn't
know that, did you? No, I am kidding.
As we are wrapping up this hearing, and I appreciate the
chairman for bringing it to our attention, hydropower is
extremely important to our State. In the eastern part of the
State where I represent, we have a tremendous amount of water
and hydropower. And forgive me, ma'am, if I mess your name up,
but is it Ms. Swaminathan?
Ms. Swaminathan. That is right.
Mr. Mullin. I said that right? Wow. That is a first.
Anyway, I appreciate you being here. I have a couple questions.
One, your company has the largest portfolio of hydropower,
right?
Ms. Swaminathan. Of development projects.
Mr. Mullin. Of development projects. Right. So why aren't
there more companies like yours?
Ms. Swaminathan. That is a question we ask ourselves all
the time. I think that when you are looking at companies like
ours who leverage private capital, investors in the energy
space have lots of choices. They can invest in hydropower, they
can invest in wind, solar, fossil fuels, potentially
geothermal, et cetera.
So, what is important to look at from an investors' point
of view is the totality of the attractiveness of that
investment proposition. And what they see in general terms when
they look at hydropower is a very long process that not only is
long, but leaves unresolved many important parameters until
very late in the process, which is difficult.
Mr. Mullin. What is a long process?
Ms. Swaminathan. So the combined Federal permitting process
for non-Federal hydropower development on Army Corps dams can
extend as far as 10 years.
Mr. Mullin. For just the permitting process. That is before
you even start the project?
Ms. Swaminathan. Yes.
Mr. Mullin. And then the project length is?
Ms. Swaminathan. The construction cycle, our average
construction time for a project on an existing dam is anywhere
from 12 months to 2, 2\1/2\ years, depending on the size and
the complexity of the project.
Mr. Mullin. So you are talking about 11, 12 years before an
investor would even be able to start seeing a return?
Ms. Swaminathan. Yes.
Mr. Mullin. How do you even raise capital? I am serious. I
mean, I used to invest quite a bit. We kind of have restraints
now that we are in office. There is no way. That is a long way.
So how do you do that?
Do you have a certain group that you go after? Because
hydropower is something that is sustainable for us. It is
clean. It is one thing that you can see both sides. Republicans
and Democrats both agree on when it generates--when we are
talking about generating power. And it is reliable to the point
that it can help bring the grid back up, too, in certain
circumstances.
I mean we have GRDA in my district that we are constantly
working close with them. So if we are not developing, then we
are behind.
Ms. Swaminathan. Right. Absolutely. And you are right,
access to capital is a real challenge in hydropower
development. And hydropower construction and projects being
what they are, capital cost is everything.
Mr. Mullin. What does it cost just to go through the
permitting process, the regulatory process before you start
your project? What is the cost on that?
Ms. Swaminathan. It can cost about a million dollars a
project to get through the FERC licensing process.
Mr. Mullin. Is that from the research you have to do, or is
that just the cost of the permits?
Ms. Swaminathan. It is not the cost of the permit itself or
the license itself. It is the cost of the studies, the cost of
maintaining a technical staff to develop the application, the
cost of the engineering work, the environmental studies, the
field work, assembling all of that into a license application,
as well as the ancillary permits that need to be put together,
again supported by study work such as the 401 water quality.
Mr. Mullin. When you are just beginning a project, before
you even can get clear to start building it, you have to have a
million-dollar investment?
Ms. Swaminathan. Right. That is not even to start building
it. That is just to get the FERC license.
Mr. Mullin. That is what I am talking about.
Ms. Swaminathan. And then, if the project is located on an
Army Corps dam, there is more process, more Federal permitting
to go through, which is actually significantly more expensive
than the environmental studies because it includes the final
engineering----
Mr. Mullin. So what does that cost?
Ms. Swaminathan. That is on the order of several million
dollars more. It depends on the size and complexity of the
project. And every project is a little different. It can be up
to $8 million.
Mr. Mullin. Eight million dollars just to go through the
process to begin the project.
Ms. Swaminathan. It can be, yes.
Mr. Mullin. And see, that is where I think we can do a
better job here in Congress. Because we in Congress should be
creating an environment for entrepreneurs like yourself and
your company to be able to thrive and be able to get through
that process. And when we create hurdles like that, it can be
as expensive as $8 million just to go through the regulations
we put in place, and we can do better than that.
So thank you so much. I appreciate it.
Ms. Swaminathan. I appreciate it.
Mr. Upton. The gentleman's time has expired.
Seeing that there are no further Members wishing to ask
questions, I want to thank you all very much for appearing with
us today, sharing your testimony.
I am going to ask unanimous consent to submit the following
documents for the record: testimony of the American Rivers,
testimony of Outdoor Alliance, testimony of Sacramento
Municipal Utility District.
[The information appears at the conclusion of the hearing.]
Mr. Upton. Pursuant to committee rules, I remind Members
that they have 10 business days to submit additional questions
for the record, and would ask the witnesses submit their
response within 10 business days upon receipt of the questions.
And without objection, the subcommittee is adjourned.
[Whereupon, at 3:10 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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