hydropower 300

On October 19, 2017, the Federal Energy Regulatory Commission (“FERC”) issued a Policy Statement, in Docket No. PL17-3, adopting a 40-year default license term for original licenses and relicenses issued for hydroelectric projects located at non-federal dams.  The Policy Statement also lays out the factors that FERC will consider when departing from the 40-year default license term.  FERC’s existing policy for projects located at non-federal dams has been to set a 30-year term for projects where there is minimal redevelopment, new construction, or environmental mitigation and enhancement; a 40-year term for projects involving a moderate amount of these development activities; and a 50-year term where there is an extensive amount of development activities.  With the new default term of 40 years for projects located at non-federal dams, FERC will avoid having to make case-by-case determinations of the level of development activities in order to set the license term, which FERC states will assist it in increasing administrative efficiencies.  The more efficient process should benefit FERC as it prepares to determine appropriate license terms for the 300 projects it expects will go through its relicensing process by year 2025.

Under the Policy Statement, there are three circumstances under which FERC will consider issuing a license that deviates from the default 40-year term:  (i) when a shorter or longer term is necessary to coordinate license terms for other projects within the same river basin; (ii) when a shorter or longer term is agreed upon in a settlement agreement, provided that doing so does not conflict with projects in the same river basin; and (iii) when a licensee expects to undertake significant development activities or undertook such activities before seeking a new license, justifying a term longer than 40 years, provided the longer term does not conflict with projects located within the same river basin.  Addressing situations where a project could receive a license term beyond the new 40-year default, FERC states that measures including the construction of pumped storage facilities, fish passage facilities, dams, and powerhouses may warrant such license terms of up to 50 years.

The Policy Statement will apply on a prospective basis for all licenses issued after October 26, 2017.  Licensees with pending license/relicense applications may submit filings with FERC to justify a term longer than the new 40-year default in accordance with the new Policy Statement.   

The Policy Statement does not address the default license term for projects located at federal dams, which FERC has an existing policy of setting at 50 years.

The Policy Statement can be accessed here

For more information on the implications of this FERC Policy Statement and other hydropower license issues, please contact Donald H. Clarke, Joshua E. Adrian or Tyler E. Mansholt.