Federal hydropower licensing of water storage reservoirs
As the owner of a storage reservoir, you may be asking if it must be part of your hydropower license. The answer is, “maybe”. There are a variety of factors that will impact its inclusion. Let me begin with the basics of what the Federal Power Act outlines.
The Federal Power Act:
- Allows the Federal Energy Regulatory Commission to include in the federal hydropower project license all project works necessary or convenient for the production of power. Section 4(e)
- Defines the project works as the physical structures of the project. Section 3(12)
- Defines the hydropower project, which is subject to the FERC license, to include dams and reservoirs which are “necessary or appropriate” in the maintenance and operation of the hydropower project. Section 3(11)
How is “necessary or appropriate” determined?
The reservoir’s impact with and without manipulation of releases from it must be determined if a storage reservoir does not contain any generation facilities itself. The storage reservoir must be included in the downstream project license if significant generation benefits are provided to a downstream hydroelectric project. If neither of these situations is present, then storage reservoir does not need to be included in the license.
How is it determined if significant generation benefits are provided by the storage reservoir?
FERC has found previously, and the Washington D.C. Circuit Court has affirmed, that a generation contribution that is in excess of 2 to 2.5 percent amounts to a significant generation benefit. This percentage is applied to both single and multiple storage reservoirs.
It does not need to be included in the license if your storage reservoir is a single storage facility and produces a downstream benefit of less than two percent to the total generation benefit.
The situation is slightly different if your storage reservoir is part of a multiple storage reservoir system that affects downstream generation. FERC has found when a facility’s contribution to the multiple storage reservoir system aggregate benefit is minimal or very small, then the facility with the minimal or very small benefit can be separated from the aggregate benefit.
Of course, there are many site specific factors that may also come into play regarding the need to include a storage facility in the FERC license. However, the above serves as a good starting point when you look at it from a generation-benefit standpoint.
If you would like to discuss some applicable examples, please feel free to contact me.
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