Electric Reliability

Legal and Policy Analysis

On August 22, 2014, the U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit"), in a unanimous decision, vacated and remanded to the Federal Energy Regulatory Commission ("FERC") a FERC order approving the North American Electric Reliability Corporation’s ("NERC") imposition of a monetary penalty against the Southwestern Power Administration ("Southwestern") for its violation of certain mandatory Reliability Standards.

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On May 23, 2014, the U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit"), in a 2-1 decision, vacated in its entirety and remanded the Federal Energy Regulatory Commission’s ("FERC") Order No. 745, "Demand Response Compensation in Organized Wholesale Energy Markets." Order No. 745 sought to incentivize retail customers to reduce electricity consumption, when economically efficient, by requiring independent system operators and regional transmission organizations to compensate, in certain circumstances, demand response providers at market prices, i.e., the locational marginal price.

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Despite the partisan grid lock gripping the nation’s capital of late, Congress managed to act with a united voice to direct improvements to the hydropower licensing process administered by the Federal Energy Regulatory Commission (“Commission”). After Congress unanimously passed the Hydropower Regulatory Efficiency Act of 2013 (“the Act”), President Obama signed the bill into law on August 9, 2013. The new law streamlines the regulatory process of obtaining a license for certain types of hydropower projects and should promote the development of new hydropower resources across the country.

The Act affects hydropower licensing in five ways:
    • It exempts a greater number of “small hydroelectric power projects” at existing dams from licensing by raising the threshold for such projects from 5,000 kW to 10,000 kW.
    • It authorizes an expedited exemption process for any previously unlicensed (or unexempted) hydropower projects on non-federally owned conduits with a proposed installed capacity of 5 MW or smaller. The Commission has already posted to its website instructions for filing the required notice: http://www.ferc.gov/industries/hydropower/indus-act/efficiency-act/qua-conduit.asp.
    • It provides the Commission with authority to extend the period of a preliminary permit for an additional two years beyond the initial three-year term if “the permittee has carried out activities under such permit in good faith and with reasonable diligence.” This represents a significant regulatory improvement protecting permittees diligently preparing license applications for new generating capacity.
    • It recognizes the untapped potential of pumped storage facilities and of hydropower projects at conduit facilities by directing the Secretary of Energy to study the technical potential of these types of projects.
    • In an effort to reduce the delays and costs involved in the licensing process, it directs the Commission to investigate the feasibility of instituting a two-year process for licensing hydropower projects at nonpowered dams and closed loop pumped storage projects. The Act requires the Commission to host a workshop on the feasibility of such an expedited process and, if practicable, to implement pilot projects to test the feasibility of the expedited process. The Commission hosted the workshop on October 22, 2013.
    Hydropower is the single largest source of renewable energy in the country. According to the National Hydropower Association, only three percent of the nation’s 80,000 dams generating electricity. Further, the National Hydropower Association estimates that 12.6 gigawatts of new, renewable power can be generated at existing dam sites. The Act’s call to streamline the often costly and time-consuming licensing process should incent the development of new hydropower resources throughout the country.

    Duncan, Weinberg, Genzer & Pembroke’s attorneys are experienced and actively involved in all aspects of hydropower regulation. Please visit the hydropower section our of website for more information on our hydropower practice and let us know if we can be of assistance to you in investigating the potential for development of hydropower resources— whether hydroelectric facilities at new or existing dams, conduit projects, or pumped storage projects—within your area. Please contact Don Clarke or Josh Adrian or either by phone at 202-467-6370.