FERC rejects extended permit for 5-MW Kenai Hydro project in Alaska

The Federal Energy Regulatory Commission on Feb. 27 rejected a request by Kenai Hydro LLC for a ten-month extension of its successive preliminary permit for the proposed Grant Lake Project.

The 5-MW project would be located on Grant Lake and Creek, near the town of Moose Pass, in Kenai Peninsula Borough, Alaska. It would include a transmission line consisting of either a 3.5-mile-long, 24.9-kV line, or a 1-mile-long, 115-kV line, connecting the powerhouse to the City of Seward’s or to Chugach Electric’s transmission line. The total energy output would be 19,700 megawatthours, which would be sold to a local utility. 

In October 2008, Kenai Hydro received its first preliminary permit for the Grant Lake Project. In March 2012, Kenai Hydro received its current preliminary permit, which will expire on Feb. 28, 2015. In issuing this successive (second) preliminary permit, commission staff considered Kenai Hydro’s substantial progress toward filing a license application as evidenced by its filing of a Pre-Application Document and a Notice of Intent to file a license application using the Traditional Licensing Process; conducting comprehensive biological and engineering studies; and engaging in extensive consultation with affected parties.

On Jan. 27, Kenai Hydro filed a timely request for a ten-month extension of its existing preliminary permit. On Jan. 30, the Kenai River Watershed Foundation objected because this permittee has held this site for six years over other potential applicants. On Feb. 11, the Center for Water Advocacy also objected because it maintains that the public has not been adequately included in the scoping process and because the applicant has collected only minimal streamflow data.

Section 5(b) of the Federal Power Act, as amended by the Hydropower Regulatory Efficiency Act of 2013, gives the commission the option to extend a preliminary permit term once for not more than two additional years if the commission finds that the permittee has carried out activities under the permit in good faith and with reasonable diligence. It appears that, in giving the commission the authority to extend the term of a preliminary permit once, but for no more than an additional two years, Congress recognized that three years may not always be enough time to develop and file a license application, but that five years should be sufficient. The commission noted that it has rarely authorized the reservation of a site under a preliminary permit for a period longer than six years to the same applicant, unless the applicant can demonstrate that there is some extraordinary circumstance or factor outside its control that prevented it from making progress toward developing a license application.

FERC said in its Feb. 27 ruling: “Kenai Hydro has failed to meet that burden. After a review of its extension application and the record for Kenai Hydro’s second preliminary permit, we find that there is no evidence of extraordinary circumstances or factors outside of its control during the duration of its permit that prevented it from filing a development application within the permit’s three-year term. While Kenai Hydro has shown extensive progress toward the development of a license application, it has held permits for the site since October 2008. There is little doubt that allowing the site to be reserved to Kenai Hydro for more than seven years (i.e., extending the term of its second preliminary permit through December 2015) would constitute site banking.”

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.