FERC backs staff decision to excise power allocation from hydro license

The Federal Energy Regulatory Commission on June 20 denied a request for rehearing from the Public Utility District No. 1 related to a March 20 decision about power allocation from a hydro project in Washington.

On March 20, commission staff issued a new license to the City of Seattle, Wash., for the continued operation and maintenance of the Boundary Project No. 2144, located on the Pend Oreille River in eastern Washington. The Public Utility District No. 1 of Pend Oreille County, Wash., filed a timely request for rehearing of the March 20 order, arguing that the order erred in not requiring Seattle to allocate a portion of the project’s power to the district.

In 1957, Seattle and the district filed competing license applications for projects on the Pend Oreille River in eastern Washington. The river’s entire length within the state of Washington lies within the district’s service area. Seattle proposed the 1,003-MW Boundary Project near the Canadian border approximately 300 miles from Seattle’s service area. The district proposed the 356-MW Z Canyon Project at a site one mile upstream (south) from Seattle’s.

FERC’s predecessor, the Federal Power Commission (FPC), conducted a competitive licensing proceeding in 1961 and then issued a license to Seattle for the Boundary Project, finding that it was best adapted to a comprehensive plan for developing the Pend Oreille River. On rehearing, the FPC granted the district’s request that Seattle be required to reserve a portion of the project’s power to be used in the area where the power resource is located.

Accordingly, the commission added Article 49 to the original license, requiring that Seattle make 48 MW of project power available at cost to meet the load requirements of present and potential customers within the district’s service area.

The new license for the Boundary Project was issued to Seattle on March 20. That order concluded that the language of Article 49 was inconsistent with the commission’s long-standing policy and practice not to require a specific allocation of power from licensed projects in the absence of a legislative directive of Congress. Seattle and the district have entered into a contract to continue the assignment on the same terms that existed under Article 49. This contract will expire upon the next relicensing of the Boundary Project in 42 years.

FERC said old decision doesn’t trump new policy

“For clarity, we use the term ‘allocation’ in relation to a license article reserving power to a specific recipient, and we use the term ‘assignment’ in relation to a private agreement reserving power to a specific recipient,” said FERC’s June 20 decision. “The core of the District’s argument is that the Commission should retain a license article allocating Boundary Project power to the District to avoid the potential unfairness to the District if, at the time of the next relicensing proceeding in 42 years, the private contract assigning the power is not renewed. The District further argues that, at a minimum, the Final Environmental Impact Statement (EIS) for the Boundary Project relicensing violated the National Environmental Policy Act (NEPA) by not considering the potential environmental impacts that would result from the elimination of the power allocation requirement from the new license.”

The district argued that nothing in the intervening 50 years has changed the circumstances which, at the time of the original license, led the commission to conclude that the public interest required an allocation of 48 MW of project power to the district.

“A relicensing proceeding requires a fresh look and a new application of the comprehensive development/public interest standards of sections 4(e) and 10(a) of the Federal Power Act (FPA) in light of today’s facts and policies,” FERC noted. “We balance all public interest considerations relative to the comprehensive development of the waterway when determining whether and, if so, under what conditions to issue a license. The Commission does not improperly ‘depart from established precedent’ simply because it reaches a different conclusion on one issue than it did 50 years ago. In fact, as discussed below, the District recognizes that requiring a power allocation is inconsistent with longstanding Commission policy. That being the case, a return here to our general policy is not arbitrary and capricious.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.