Time for change?

4 August 2002

The issue of licensing hydro plants has long been a topic of intense debate in the US. At this year's Hydrovision 2002 conference in Oregon, delegates were keen to attend a session which discussed the current state of the licensing process and recent moves by the Federal Energy Regulatory Commission to help solve complexities often associated with the system. Carrieann Davies attended the session to find out more

THE CHALLENGES facing the hydro industry are reminiscent of an episode of the Mighty Morphin Power Rangers. This may seem like a strange statement, but it was one given by Jennifer James during her keynote speech at the Hydrovision 2002 conference, held from 29 July to 2 August in Portland, Oregon, US. However, when you take into account her explanation for making such a statement, you realise that this similie is not that strange at all.

So, just how is the industry we work in reminiscent of a children's television programme that was at its peak of popularity in the late 1990s? As James explained, in each episode of the TV programme, the six main teenage characters transform into hi-tech dinosaurs to battle evil. Once they win the battle - as they ultimately do in such programmes - they transform back into their original characters, intelligent young people who know a lot about science, and try to come up with solutions to any problems they may face in the future. James told delegates that ultimately, this is how we operate in the hydro industry. Those involved in the industry have to battle old enemies in order to see their hydro projects through, while at the same time designing new methods of operating in order to survive in the future.

Many of you involved in hydro in the US would agree that one way the industry has to take on this role of battling old enemies while developing new methods is through the licensing process. This issue was addressed at the conference in the session entitled Licensing Reforms: After the Dust Settles. Chaired by Richard Roos Collins, senior staff attorney and legal affairs director of the Natural Heritage Institute in the US, the session featured panellists Mike Akridge (manager of hydro services at Southern Company in the US), Bill Bettenberg (acting director, office of policy analysis, US Department of the Interior), Gregg Carrington (director of licensing, Chelan County Public Utility District), Andrew Fahlund (policy director, hydropower programmes, American Rivers), and J Mark Robinson (director, office of energy projects, Federal Energy Regulatory Commission (FERC)).

Roos Collins opened the highly attended session by saying that he wanted to take the opportunity to correct the title of the impending discussion from 'when the dust settles', to the more accurate 'as the dust gets kicked up'. He explained that this was more apt as the panellists were going to be discussing some of the efforts underway to reform the licensing rules under the existing statute and anticipate where these efforts will lead. He asked panellists to answer the question that were no doubt on the minds of those attending the session - is administrative reform a good idea, and if so, where should it lead?

Administrative reform

'I just want to start this off and say it's time,' was the answer given by FERC representative Robinson in response to the opening question. 'However, before we decide what we have to do, we have to understand what the problem is.

'The underlying criticism of the licensing process is that it takes too long and costs too much to do,' he continued. 'Well we [FERC] proposed ideas to take less time and cost less money, and you know what, not a lot of people responded favourably. As of June 2001, we in the FERC office set out a new course to hold people to a reasonable timeframe in order to get things done. We were no longer taking the posture, "well, they're working on it". But nobody wanted it,' he claimed.

'I think the problem has migrated or evolved. People are uncomfortable with the amount of complications associated with hydro licensing. It's way more complicated than it should be for the level of what it is that we're doing,' he says, 'and I think that is something that needs to be addressed.'

Robinson pointed out that initiatives are currently being undertaking to improve the situation. In 2001, FERC published a report that addressed the causes for delay and high cost in the relicensing processes.

The report resulted in considerable commentary by licensees, federal agencies, state agencies and other stakeholders. Recently, a national review group (NRG) consisting of industry representatives and non-governmental organisations (NGOs) together with agencies participating in an advisory capacity, has developed and released a proposal for improving the relationship between FERC and federal and state agencies in environmental review. Concurrently, the federal agencies have undertaken, through their inter-agency hydropower committee, similar work which is expected to result in a public proposal in the next few months. FERC and the US Department of the Interior have also been negotiating a memorandum of understanding that will change their relationship in licensing procedures.

'Here's what we are proposing,' explained Robinson. 'Firstly, we want to take advantage of all the efforts that have been going on and see if we can meld those together. We need to expose those ideas that make sense, have merit and should be implemented.' He explained that this should be achieved through FERC co-operation with state and federal agencies in a jointly run forum to be held throughout the US. 'This will bring people together and get as much intelligence as possible focussed on the ideas that are there and find out if there are any others that need to be exposed.

'I'm not a big fan of continuing five more years of discussion, there has to be some discipline involved in this and there has to be some effort to drive it home and get it done,' he said. 'These forums will lead quite naturally into a rule making process, and we need invite everyone in.

'We have to recognise that everybody has a special role to play in this process before us. At the end of the day, there has to be a general recognition that even if it didn't go the way you wanted, the process was designed to allow a fair hearing for everyone. No one had an advantage, there was no bias anywhere.'

Robinson explained to delegates that he hoped to see the forums start throughout the country as early as November this year, with the notice of proposed action (NOPA) completed in February 2003. The NOPA will be taken out into the industry in the March-April 2003 timeframe, with the final rule on the licensing process likely to be in place by July-August 2003.

'It may seem a little quick given the amount of time people have been talking about it,' he commented, 'but I see this as a plus. We have the opportunity to build something important and get it done quickly.'

Simplicity is key

Robinson told delegates that an element he would like to see written in this rule is simplicity. 'We've got projects by and large which have been there for a long time. We know about them, we know what they're doing so we ought to be able to develop a process that recognises that and actually simplifies it. Yes, there are going to have to be all sorts of intricacies to it, but I'd like to look at it at different levels and have an overall simple way to approach licensing that everyone can understand and agree with.

'Flexibility is another issue that is important. Every project is not created equal. I don't want a process that tries to fit every project into it and it makes sense for all. Any process we come up with has to have as a fundamental design feature - the ability to recognise the issues associated with each project individually,' he continued.

'Beyond the discipline of getting the rule done, there has to be a discipline in the rule itself. There can be no dead end. There are dead ends right now. There are existing rules that go to an end and there's nobody left to decide. I want to make sure that we no longer perpetuate this type of regulation.

'Finally, I want to eliminate sequential processing. This complexity is probably more dangerous to the hydro power licensing process than anything else. If we can all be working at the same time, using the same information and getting it done, I think we'll all be better off.'

Working together

Greg Carrington, of Chelan County PUD, which has been involved with the NRG, agreed that everyone needs to work together to achieve a better system. 'It's rather easy to complain about the process. What we're doing is we're trying to put pen to paper, we're trying to come up with a solution that we think will work.

'We know that we have to fix the relicensing process, that's the key right now,' Carrington told delegates. 'We want everyone to understand that we believe FERC should be in charge of the relicensing process, we're not trying to change that at all, we're trying to get people to talk about it and be co-ordinated.'

Andrew Fahlund of American Rivers, another member of the NRG, agreed: 'The lesson I have learned is that we're better off trying to cross the finish line together. I think if we can learn to trust each other better and commit to solving problems rather than complaining, we'll be successful. I hope we can come up with a good collaborative rule-making process in which everyone can participate and become problem solvers

'I think the product we've developed through the NRG is a good starting point and I hope that others have good constructive ideas and are ready and willing to roll up their sleeves and contribute in a positive way. I think that's going to be the best chance that we have,' he said. 'There's going to be a lot of good minds who are involved in relicensing from all sides, from all perspectives of this subject, and I think unless you're contributing to the solution you're contributing to the problem and I certainly hope everyone is contributing to the solution.'

From the NGO perspective, Fahlund said his main interests in the rule-making lay in public participation. 'Involving the public in what is a public process managing a public resource is really important and I can't underscore that enough.

'We need to simplify without dumbing down. I think the process is over complex and I think that it can be simplified and should be simplified but that should not come at the expense of public participation and environmental quality.' Mike Akridge of Southern Rivers, a licensee, emphasised the point of the need for public participation when he told delegates that one of the main problems that the company still encounters in its own relicensing is a lack of understanding of the role hydro plays and a lack of appreciation of the benefits that hydro brings to the national energy mix.

Licensees' viewpoint

So what are the licensees looking for in a new licensing process? Carrington said that for Chelan County PUD, an important issue is surety with the licence. 'What I mean by surety is I want FERC to be involved throughout the relicensing process so that they can see what goes on in the field,' he commented. 'They can see what goes on in the meetings and they can respond to those. They need to see that licensees are going out there and doing their best to complete the studies that are required of them. I want agency input.

'The other thing I want as far as surety is concerned is I want the licensee's level of commitment to be defined. In other words, I don't want an open-ended licence. I want to know what my level of commitment will be.'

Akridge agreed: 'I think from our perspective we're looking for certainty and we're interested in flexibility. However, the two are not necessarily mutually exclusive. We're willing to give up some flexibility in exchange for some certainty in the process.

'We're now in the midst of a rather complicated relicensing process involving nine stations on two river systems going at one time. If we're fortunate the process will only take about seven years and cost somewhere between US$15-20M. Just in process cost,' he explained. 'So to say that we are interested in seeing administrative reform which will improve the certainty of that process, and hopefully reduce the cost and the length of time, is an understatement. We're involved in every forum that we can be involved in where we see the opportunity to not only improve the administrative process but also to hopefully educate stakeholders on the value of hydro.'

Licensees in the audience were keen to ask the panellists if this new rule was to be a third option to licensing of hydro plants, to add to the traditional and alternative processes. This question seemed to divide some of the panellists. Robinson told the audience that this hasn't been decided yet, but that this is a likely option as it would allow flexibility for hydro plant operators. However, Fahlund disagreed, suggesting that the industry doesn't need so many different options, this could lead to increasing complexities in the licensing process.

Will it work?

But will the new system work? Perhaps Bill Bettenberg of US Department of the Interior answered this best when he told delegates that, on the regulatory front, the department has made a substantial investment over the last year and half in all of the initiatives mentioned.

'We have poured a lot of time and talent into providing information for the NRG process, for actively participating in the Inter-Agency Hydropower Committee process and working with FERC on other initiatives,' he said.

'I think a lot of the participants in the process are looking at the licensing process, saying it's broke and have a lot of common ideas on how to fix it. For that reason I think it's important that we seize the moment. Certainly we welcome the FERC initiative on rule making. From the standpoint of improving the process it is long overdue, but from the standpoint of being prepared to improve the process, I think it's timely right now. I think we've bought a large number of people together in common cause, so the time to strike is now.'

Bettenberg pointed out that this process offered an opportunity to have a broad spectrum of industry, NGO, federal, state agencies and tribes involved in a new process which they see reflecting many of their concerns and would therefore be interested in making it a success.

He concluded: 'It seems that FERC has an opportunity to have a tremendous victory here, and that is to establish a process that has broad support.'

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