Hydropower Facility Licensing, Certification, Safety and Regulation Overview (7)
The hydropower facility's location, size, type of customer the facility sells energy to, and whether the facility sells energy in "interstate commerce" will determine what permits the facility requires. As an initial matter, under the Federal Power Act the Federal Energy Regulatory Commission (FERC) has authority to issue licenses to construct, operate, and maintain non-federal hydropower projects.
In addition, FERC has authority over “public utilities,” which under 16 USC 824a(e) includes any person who owns or operates facilities subject to jurisdiction of FERC. This includes any person who owns or operates a facility for the transmission of electric energy in interstate commerce and to the sale of electric energy at wholesale in interstate commerce. Interstate commerce has been interpreted broadly to include when the transmission system is interconnected and capable of transmitting electric energy across the state boundary, even if the contracting parties and the electrical pathway between them are in one state. See Florida Power & Light Company, 29 FERC, ¶ 61, 140 at 61, 291-92 (1984).
Further a hydropower project may also require state public utility commission approval, and a state agency dam safety and construction review. Small-low impact hydropower projects may also qualify for state regulatory assistance.
Facility Licensing, Certification, Safety and Regulation Overview Process
7.1 to 7.2 – Does the Project Require a FERC Authorization?
The Federal Energy Regulatory Commission (FERC) has authority to license certain non-federal hydropower projects. Other than for a Qualifying Conduit Hydropower Facility (those located on a non-federally owned conduit with a capacity up to 5 MW), which requires only a Notice of Intent be filed with FERC, developers are required to complete FERC’s hydropower licensing/exemption process for non-federal hydropower projects (FPA Section 30). Types of hydropower projects include hydroelectric dams, run-of-river, pumped storage, or small hydro including small conduits. The term “conduit” means any tunnel, canal, pipeline, aqueduct, flume, ditch or similar manmade water conveyance used to distribute water for agricultural, municipal, or industrial use, and not used primarily to generate electricity. A FERC license is required to construct, operate, and maintain non-federal hydroelectric projects:
- (a) located on navigable waters of the United States;
- (b) occupying U.S. lands;
- (c) utilize surplus water or water power from a U.S. government dam; or
- (d) located on a stream over which Congress has Commerce Clause jurisdiction, where project construction or expansion occurred on or after August 26, 1935, and the project affects the interests of interstate or foreign commerce.
(FPA Section 4; Pub. L. no. 113-23)
Two categories of hydropower plants may be granted an exemption by FERC from its hydropower licensing process: (1) small conduit hydroelectric facilities or (2) small hydroelectric projects. The first exemption is for conduit hydroelectric facilities up to 40 MW utilizing flow from a man-made conduit operated primarily for non-hydroelectric purposes (18 C.F.R. §§ 4.90-4.96). The second exemption is for a small hydroelectric power project defined as any project in which capacity will be installed or increased after the date on which an application is made for the exemption, which will have a total capacity of not more than 10 MW, which will utilize for electric power generation the water power potential of an existing dam that is not owned or operated by the United States or by an instrumentality of the Federal Government (including the Tennessee Valley Authority), or which would utilize for the generation of electricity a natural water feature, such as a natural lake, waterfall, or the gradient of a natural stream without a need for a dam or man-made impoundment and would not retain water behind any structure for the purpose of a storage and release operation (18 C.F.R. §§ 4.31. 4.101-4.108).
7.3 to 7.4 – Will the Project Require Modification to a USACE Managed Structure?
Of primary concern will be whether the project will require alterations to, or temporary or permanent occupancy or use of an USACE managed civil works project. If the proposed project will alter or utilize an USACE structure the developer must obtain Section 408 authorization under the Rivers and Harbors Act of 1899. In addition, any hydroelectric facility on an USACE structure must complete the FERC licensing process.
7.5 to 7.6 - Is the Facility a Small Power Production Facility?
If the facility is a small power production facility the developer may apply for Certification as a Qualifying Facility under Public Utility Regulatory Policies Act of 1978 (PURPA). A small power production facility is a generating facility that is 80 megawatts or less with a primary energy source (i.e. at least 75%) of hydro, wind, solar, biomass, waste, or geothermal resources. Qualifying Facilities have the right to sell energy to public utilities at the "avoided cost" rate (i.e. the cost to the public utility to produce the energy itself), provided FERC has not relieved the utility from its purchase obligation under 18 CFR 292.309. Under USC 824a-3(m) after August 8, 2005, no electric utility shall be required to enter into a new contract or obligation to purchase electric energy from a qualifying small power production facility if FERC finds that the facility has nondiscriminatory access to:
- Independently administered, auction-based day ahead and real time wholesale markets for the sale of electric energy wholesale markets for long-term sales of capacity and electric energy; or
- Transmission and interconnection services that are provided by a FERC approved regional transmission entity and administered pursuant to an open access transmission tariff that affords nondiscriminatory treatment to all customers and competitive wholesale markets that provide a meaningful opportunity to sell capacity, including long-term and short-term sales, and electric energy, including long-term, short-term and real-time sales, to buyers other than the utility to which the qualifying facility is interconnected. In determining whether a meaningful opportunity to sell exists, the Commission shall consider, among other factors, evidence of transactions within the relevant market; or
- Wholesale markets for the sale of capacity and electric energy that are, at a minimum, of comparable competitive quality as markets described in the options above.
- Note - Qualifying Facilities under 20 megawatts are exempt from the Federal Power Act, including sections 205 and 206.
In addition, for projects reviewed under the FERC licensing process, the developer must submit to FERC a Pre-Application Document (PAD) describing the existing and proposed (if any) project facilities and operations, provide information on the existing environment, and existing data or studies relevant to the existing environment, and any known and potential impacts of the proposed project on the specified resources (18 CFR 5.6(c)). Relevant federal agencies will review and comment on the PAD. Comments made by a fish and wildlife agency must provide a reasonable estimate of the total costs the agency anticipates it will incur in order to set mandatory terms and conditions for the proposed project (18 CFR 5.9(c)).
7.7 to 7.8 – Is the Facility an Independent Power Producer That Exclusively Sells to Wholesale Customers?
Independent power producers that exclusively sell energy to wholesale customers may qualify as Exempt Wholesale Generators (EWGs). The Energy Policy Act of 1992 created an exemption from Public Utility Holding Company Act (PUHCA) for EWGs. For EWGs to maintain their status they must restrict sale agreements to wholesale sales. As for Qualifying Facilities over 20 megawatts, EWGs are subject to FERC regulations on rate approval under section 205 of the Federal Power Act. However, unlike Qualifying Facilities, EWGs may not take advantage of retail sale opportunities in local jurisdictions.
7.9 to 7.10 – Will the Facility Require Approval from a State Public Utility Regulatory Authority?
If a state public utility regulatory authority regulates the facility, the facility may need a state certification or other approval. For example, a developer may need a Certificate of Public Good (CPG) or Certificate of Public Convenience and Necessity (CPCN) for a transmission extension project or a net-metered project. In general, if a facility sells its power to the public, the facility is considered a state "public utility" for the purposes of regulation by the state public utility regulatory body. This typically requires the regulatory body to issue a CPCN or CPG for its construction, operation, or sell of electricity.
In Alaska, a public utility may need to obtain a Certificate of Public Convenience and Necessity from the Regulatory Commission of Alaska before commencing with utility operations and receiving compensation for providing services to customers. For more information, see:
Currently, California does not require approval from the California Energy Commission regarding hydropower development.
In Colorado, “public utilities” need a Certificate of Public Convenience and Necessity (CPCN), from the Colorado Public Utilities Commission, in order to construct or operate a facility or an extension of a facility. 4 CCR 723-3-3102; CRS 40-5-102, Certificate of Public Convenience and Necessity. For more information, see:
In New York, electric corporations must obtain a Certificate of Public Convenience and Necessity from the New York Public Service Commission (Commission) before beginning construction of an electric plant. N.Y. Pub. Serv. Law § 68, Certificate of Public Convenience and Necessity. For more information, see:
In Vermont, a developer may need to obtain a Certificate of Public Good (CPG) from the Vermont Public Service Board (Board) for a transmission line extension project, or an interconnected group net-metered hydroelectric power system. The Board will review the proposed project on a site-specific basis analyzing the environmental, economic and social impacts of the proposed project before issuing a CPG.
7.11 to 7.12 – Does the Project Qualify as Small-Low-Impact Facility?
Small-low-impact projects may qualify for state run enhanced permitting assistance programs. FERC may waive regulatory some requirements in certain instances, such as a small-low impact hydropower project. States may have a streamlined process for institutionalizing small hydropower assistance programs that accelerate small-low-impact hydropower development in a cost-effective and environmentally responsible way. FERC Small/Low Impact Hydropower Program Website; Oregon Department of Energy Small, Low-Impact Hydropower Website; Colorado Energy Office: Colorado Small Hydropower Handbook; Small Hydropower Assistance Program.
Although many states have their own unique small-low-impact hydropower program many have a similar process. Most states have a pre-screening process to determine if the project meets the programs low-impact criteria, a coordinated resource agency review practice, and a single point of contract for applicants (developers). Most states also institute shorter comment periods for certain permits, conduct multi-agency site visits, and may submit a letter to FERC indicating that state agency requirements are satisfied or submit a FERC exemption application on the developer’s behalf, expediting the permitting timeline. Each state defines small hydropower differently, but all states require projects to meet specific cultural and natural resource criteria including minimum flows, water quality, fish passage, watershed protection, threatened and endangered species, recreation, and cultural resource protection. FERC Small/Low Impact Hydropower Program Website; Oregon Department of Energy Small, Low-Impact Hydropower Website; Colorado Energy Office: Colorado Small Hydropower Handbook; Small Hydropower Assistance Program.
Alaska does not currently have a program for small-low-impact hydropower facilities.
California does not currently have a program for small-low-impact hydropower facilities.
In Colorado, small, low-impact hydroelectric projects may qualify for the Streamlined Small, Low Impact Hydropower Permitting Program (Program). The Program reduces the time it may take to undergo the state environmental review process, which in turn, may lead to quicker FERC processing of a license or exemption application. Colorado - C.R.S. 24-38.5-108, Colorado Energy Office-State Agency Coordination of Review of Federal License and Exemption Applications for Hydroelectric Energy Projects; Successfully Streamlining Low-Impact Hydropower Permitting: Colorado’s Model for the Entire Country, at p.1. For more information see:
New York does not currently have a program for small-low-impact hydropower facilities.
Vermont’s Small Hydropower Assistance Program is an optional program that provides enhanced assistance from the Vermont Agency of Natural Resources (ANR), the Vermont Public Service Department (Department) and the Vermont State Historic Preservation Office (SHPO) of the Vermont Agency of Commerce and Community Development, for small, low-impact projects. Vermont Small Hydropower Assistance Program Overview.
The Program is designed to provide an expedited review process for small-low-impact hydroelectric projects in accordance with the Small Hydropower Assistance Program Vermont Small Hydropower Assistance Program Site-Specific Determinations Summary. For more information, see:
7.13 to 7.14 – Does the Project Include a Dam or Reservoir Subject to a State Safety Review Process?
If the hydropower project requires the construction, enlargement, repair, or alteration of a dam and/or reservoir, the state may require that the dam and/or reservoir pass a state safety inspection process.
In Alaska, a hydropower developer may need to obtain a certificate of approval from the Alaska Department of Natural Resources (ADNR) if the hydropower project will involve the construction, enlargement, repair, alteration, maintenance and/or operation of a dam. AS 46.17.040. For more information, see: Dam Safety Review:
In California, dams and reservoirs within the State’s jurisdiction must comply with the California Water Code and the California Code of Regulations’ requirements for dam safety. Dams and reservoirs owned by the United States are not subject to State jurisdiction except as otherwise provided by federal law. Other dams and reservoirs (meeting the definitions of the California Water Code) are within the State’s jurisdiction.
The California Water Code entrusts the regulatory power to oversee dam safety to the Department of Water Resources, which has delegated this authority to the Division of Safety of Dams (DSOD). The DSOD reviews and approves plans and specifications and oversees construction in order to protect against the loss of life and property due to dam failure.
For more information on California’s dam safety review process, go to:
In Colorado, a developer may need to submit dam and reservoir construction plans to the Colorado State Engineer’s Office for approval before beginning construction. Or at minimum the developer may need to provide a notice of intent to construct a dam to the State Engineer. C.R.S. § 37-87-105(1), Approval of Plans for Reservoir.
In New York, a developer may need to obtain a permit from the Department of Environmental Conservation (DEC) if the project will include the construction, reconstruction, or repair of a dam or other impoundment. The DEC is entrusted with the regulatory power to review proposed dam construction and/or modifications, conduct dam safety inspections, and monitor projects for compliance with dam safety criteria in order to protect people from the loss of life and property due to flooding and/or dam failure. Dam Safety, Coastal & Flood Protection (New York); Dam Safety (New York). For more information on New York’s dam safety review process, go to:
Vermont does not currently have a dam safety review process.
7.15 to 7.16 – Does the Project Qualify for State Renewable Portfolio Standard (RPS) Certification?
Some states require renewable energy electric generating facilities to complete a certification process to qualify as a renewable energy portfolio standard (RPS) eligible facility. These RPS or renewable energy certified facilities must comply with state specific procurement and accounting requirements, and may count their generation towards the facility’s RPS goal or mandate. The state then may use the electric generation from these certified facilities to count towards the state’s RPS mandate or goal.
Alaska does not currently does not have a mandatory or voluntary RPS requirement and therefore renewable energy generating facilities are not required to obtain a certification of eligibility for RPS procurement purposes.
The California Energy Commission is required to certify certain electric generation facilities as eligible renewable resources for RPS purposes. The CEC is required to certify electric generation facilities as eligible renewable resources that LSEs may use to satisfy their RPS procurement requirements, develop an accounting system to verify LSE’s compliance with the RPS, and adopt regulations specifying procedures for the enforcement of RPS procurement requirements of POUs. Cal. Pub. Res. Code §§ 25740-25751; Cal. Pub. Util. Code §§ 399.11-399.25(a); Renewables Portfolio Standard Eligibility Guidebook, at p.1. For more information, see:
Colorado does not currently require renewable energy generating facilities to obtain a certification of eligibility for RPS procurement purposes. Colorado tracks renewable energy generation and compliance solely through the Western Renewable Energy Generation Information System (WREGIS).
New York does not currently require renewable energy generating facilities to obtain a certification of eligibility for RPS procurement purposes. New York tracks renewable energy generation and compliance solely through the New York Generation Attribute Tracking System (NYGATS).
Vermont does not currently require renewable energy generating facilities to obtain a certification of eligibility for RPS procurement purposes. Vermont tracks renewable energy generation and compliance solely through the NEPOOL Generation Information System (NE-GIS).
Washington does not currently require renewable energy generating facilities to obtain a certification of eligibility for RPS procurement purposes. Washington tracks renewable energy generation and compliance solely through the Western Renewable Energy Generation Information System (WREGIS).
7.17 – No Additional Permit Needed; Continue with Project
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- FERC Small/Low Impact Hydropower Program Website
- Oregon Department of Energy Small, Low-Impact Hydropower Website
- Colorado Energy Office: Colorado Small Hydropower Handbook
- Small Hydropower Assistance Program
- California Energy Commission, Renewables Portfolio Standard Eligibility Guidebook
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