FERC rejects another permit for 801-MW pumped storage hydro project in Arizona

The Federal Energy Regulatory Commission, saying this was an example of banned “site banking,” on Nov. 26 rejected a successive preliminary permit for an 801-MW pumped storage hydro project in Arizona.

Arizona Independent Power Inc. (AIP) had filed an application for a successive preliminary permit for the Verde Pumped Storage Project, which would be located within the Colorado River region near Maricopa County, Arizona. In August 2011, commission staff had issued AIP a three-year preliminary permit to preserve AIP’s right to have the first priority in applying for a license while it studied the proposed project’s feasibility.

The project would consist of: a roller-compacted concrete dam (upper reservoir) having a total storage capacity of 13,900 acre-feet at a normal maximum operating elevation of 3,040 feet mean sea level (msl); a roller-compacted concrete dam (lower reservoir) having a total storage capacity of 13,900 acre-feet at a normal maximum operating elevation of 1,800 feet msl; (3) two 12,160-foot-long, 19-foot-diameter penstocks; a powerhouse with approximate dimensions of 750 feet long by 70 feet wide by 175 feet high, housing three 267-MW Francis pump turbines and motor generator units; two 3,000-foot-long, 21-foot-diameter tailraces; and a twin circuit, 40-mile-long, 500-kV transmission line extending to existing transmission line rights-of-way owned by the Arizona Public Service. The estimated annual generation was 1,078 gigawatt-hours.

On June 1, AIP filed a timely request for a two-year extension of its original preliminary permit, which was to expire on July 31, 2014. On July 23, commission staff denied the permit extension, finding that AIP did not demonstrate that it carried out activities under the permit with reasonable diligence and failed to show in its extension application that it is taking steps toward preparing a development application for the proposed project. “Rather, the order found that AIP’s application clearly indicated a desire to hold the site until financial conditions improve before it pursues project development, which would constitute site banking,” said the Nov. 26 order.

AIP applied again, leading to the Nov. 26 order, which reads in part: “In 2013, Congress amended the [Federal Power Act] to provide that a preliminary permit term can be extended once for not more than two additional years beyond the three-year term allowed under the FPA if the Commission finds that the permittee has carried out activities under the permit in good faith and with reasonable diligence. As noted above, the Commission denied AIP’s request for an extension due to the fact that AIP did not pursue the requirements of its prior preliminary permit in good faith and with reasonable diligence. Further, in its application for a successive permit, AIP provides no justification for why it has not made more progress toward a development application during its first permit term. For the above reasons, AIP’s application for a successive preliminary permit is denied.”

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.