[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.

                                
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