[House Report 104-512]
[From the U.S. Government Publishing Office]
104th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 104-512
_______________________________________________________________________
EXTENSION OF
FEDERAL POWER ACT DEADLINE FOR PROJECT NUMBER 6641 IN KENTUCKY
_______
March 28, 1996.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______________________________________________________________________
Mr. Bliley, from the Committee on Commerce, submitted the following
R E P O R T
[To accompany H.R. 2869]
[Including cost estimate of the Congressional Budget Office]
The Committee on Commerce, to whom was referred the bill
(H.R. 2869) to extend the deadline for commencement of
construction of a hydroelectric project in the State of
Kentucky, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 3
Committee Consideration.......................................... 3
Rollcall Votes................................................... 3
Committee Oversight Findings..................................... 3
Committee on Government Reform and Oversight..................... 4
New Budget Authority and Tax Expenditures........................ 4
Committee Cost Estimate.......................................... 4
Congressional Budget Office Estimate............................. 4
Inflationary Impact Statement.................................... 5
Advisory Committee Statement..................................... 5
Section-by-Section Analysis of the Legislation................... 5
Changes in Existing Law Made by the Bill, as Reported............ 5
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. EXTENSION OF COMMENCEMENT OF CONSTRUCTION DEADLINE FOR
HYDROELECTRIC PROJECT IN KENTUCKY.
(a) In General.--Notwithstanding the time period specified in
section 13 of the Federal Power Act (16 U.S.C. 806) that would
otherwise apply to the Federal Energy Regulatory Commission project
numbered 6641, the Commission shall, at the request of the licensee for
the project, in accordance with the good faith, due diligence, and
public interest requirements of that section and the Commission's
procedures under that section, extend until June 15, 1998, the time
period during which the licensee is required to commence construction
of the project.
(b) Applicability.--Subsection (a) shall take effect on the
expiration of the extension, issued by the Commission under section 13
of the Federal Power Act (16 U.S.C. 806), of the period required for
commencement of construction of the project described in subsection
(a).
(c) Reinstatement of License.--The Commission is authorized to
reinstate the license for the project referred to in subsection (a),
effective as of the date of its expiration or termination.
purpose and summary
The purpose of H.R. 2869 is to extend the deadline for the
commencement of construction of a hydroelectric project in the
State of Kentucky licensed by the Federal Energy Regulatory
Commission (FERC) until June 15, 1998.
background and need for legislation
Section 13 of the Federal Power Act (16 U.S.C. Sec. 806
(1988)) establishes time limits for commencement of
construction of a hydroelectric project once FERC has issued a
license. The licensee must begin construction not more than two
years from the date the license is issued, unless FERC extends
the initial deadline. However, section 13 permits FERC to grant
only one extension of that deadline for ``not longer than two
additional years * * * when not incompatible with the public
interests.'' Accordingly, FERC lacks authority to extend the
deadline beyond a maximum of two years from the original
deadline for commencement of construction. Therefore, a license
is subject to termination if a licensee fails to begin
construction within four years of the date the license is
issued.
Lack of a power sales contract is the main reason
construction of licensed hydroelectric projects has not
commenced. It is very difficult for a hydroelectric project
sponsor to secure financing until it has been granted a
license, and once it has been granted a license the
construction deadline begins to run. Without a power sales
contract, a project generally cannot be financed. There are
other obstacles to commencement of construction, such as
protracted proceedings on a licensee's application for a dredge
and fill permit from the Army Corps of Engineers under section
404 of the Clean Water Act. FERC has testified that in such
cases it has issued orders staying the license until matters
are resolved, suggesting that extension legislation is not
needed in order to address delays beyond the control of the
licensee. However, this does not apply to delays that are
subject to the control of the licensee, such as lack of a power
sales contract.
One reason it is difficult for project sponsors to obtain
power sales contracts is the changing nature of the electric
industry in the United States. As the industry has become more
competitive, utilities are seeking to lower their costs and
increase their flexibility. The terms of power sales contracts
that finance hydroelectric projects range up to 25 to 30 years,
and utilities are trying to avoid purchase agreements with long
terms. In addition, the generating cost of these projects may
not be as favorable as other alternatives.
H.R. 2869 would extend the deadline for the commencement of
construction for an 80 megawatt hydroelectric project (Project
No. 6641) until June 15, 1998. This would extend the deadline
to up to ten years after the date the license was issued. There
was a previous legislative extension of the construction period
for this project in the Energy Policy Act of 1992, which
extended the period until June 29, 1996. According to the
project sponsor, construction has not commenced for lack of a
power purchase agreement. The licensee has invested about $1.2
million in project development. H.R. 2869 does not ease the
requirements of a hydroelectric license, but merely extends the
period for commencement of project construction.
hearings
The Subcommittee on Energy and Power held a hearing on the
general subject of legislative extensions of hydroelectric
construction deadlines, as well as specific bills to extend the
deadline for individual projects on October 18, 1995. Testimony
was received from Ms. Susan Tomasky, General Counsel, Federal
Energy Regulatory Commission. There were no legislative
hearings held on H.R. 2869, which was introduced after the
hearing, but written comments on the bill were provided by
Federal Energy Regulatory Commission Chair Elizabeth A. Moler
in a letter to the Subcommittee dated February 27, 1996.
committee consideration
The Subcommittee on Energy and Power met in open markup
session on March 5, 1996, and approved H.R. 2869, as amended,
for Full Committee consideration by a voice vote, a quorum
being present. The Full Committee met in open markup session on
March 13, 1996, and ordered H.R. 2869 reported to the House, as
amended, by a voice vote, a quorum being present.
rollcall votes
Clause 2(l)(2)(B) of rule XI of the Rules of the House
requires the Committee to list the recorded votes on the motion
to report legislation and on amendments thereto. There were no
recorded votes taken in connection with ordering H.R. 2869
reported. A motion by Mr. Bliley to order H.R. 2869 reported to
the House, as amended, was agreed to by a voice vote.
committee oversight findings
Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of
the House of Representatives, the Subcommittee on Energy and
Power did not hold a legislative hearing on H.R. 2869. The
Subcommittee held a legislative hearing on similar bills on
October 18, 1995, received written comments on H.R. 2869 from
the Federal Energy Regulatory Commission in a letter to the
Subcommittee dated February 27, 1996, and made findings that
are reflected in this report.
committee on government reform and oversight
Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of
the House of Representatives, no oversight findings have been
submitted to the Committee by the Committee on Government
Reform and Oversight.
new budget authority and tax expenditures
In compliance with clause 2(l)(3)(B) of rule XI of the
Rules of the House of Representatives, the Committee states
that H.R. 2869 would result in no new or increased budget
authority or tax expenditures or revenue.
committee cost estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 403 of the Congressional Budget Act of 1974.
congressional budget office estimate
Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of
the House of Representatives, the following is the cost
estimate provided by the Congressional Budget Office pursuant
to section 403 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 18, 1996.
Hon. Thomas J. Bliley, Jr.,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
reviewed H.R. 2869, a bill to extend the deadline for
commencement of construction of a hydroelectric project in the
state of Kentucky, as ordered reported by the House Committee
on Commerce on March 13, 1996. CBO estimates that enacting the
bill would have no net effect on the federal budget. The bill
does not contain any intergovernmental or private sector
mandates, and would have no direct budgetary impact on state,
local, or tribal governments.
The bill would extend the deadline for construction of a
hydroelectric project currently subject to licensing by the
Federal Energy Regulatory Commission (FERC). These provisions
may have a minor impact on FERC's workload. Because FERC
recovers 100 percent of its costs through user fees, any change
in its administrative costs would be offset by an equal change
in the fees that the commission charges. Hence, the bill's
provisions would have no net budgetary impact.
Because FERC's administrative costs are limited in annual
appropriations, enactment of this bill would not affect direct
spending of receipts. Therefore, pay-as-you-go procedures would
not apply to the bill.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kim Cawley.
Sincerely,
June E. O'Neill, Director.
inflationary impact statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee finds that H.R. 2869
would have no inflationary impact.
advisory committee statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act are created by this
legislation.
section-by-section analysis of the legislation
Section 1. Extension of commencement of construction deadline for
hydroelectric project in Kentucky
This section directs FERC, upon the request of the licensee
for Project No. 6641, in accordance with the good faith, due
diligence, and public interest requirements of section 13 of
the Federal Power Act and FERC's procedures under such section,
to extend the time required for commencement of construction
for such project until June 15, 1998. The section will take
effect upon the date of expiration of the extension previously
granted by FERC. The section authorizes FERC to reinstate the
license effective upon the date of its expiration or
termination.
changes in existing law made by the bill, as reported
In compliance with clause 3 of rule XIII of the Rules of
the House of Representatives, the Committee finds that no
changes in existing law are made by H.R. 2869.