FERC indicates Chelan’s hydro investments qualify for license credit

The Federal Energy Regulatory Commission recently indicated that Chelan PUD’s significant investments in powerhouse upgrades and spillway safety at the Washington State-based Rock Island Dam qualify for early action credit toward its next operating license.

FERC’s Aug. 9 determination (Project No.  943-130) marks its first early action determination under section 36 of the Federal Power Act (FPA), which was added by the America’s Water Infrastructure Act of 2018. 

The new provision requires FERC, in establishing the term of a new hydroelectric project license, to consider certain investments made by a licensee during the term of an existing project license. 

Qualifying investments under an existing license must be given equal weight with investments made by the licensee to implement a new license. 

Section 36(c) provides a procedure under which a project licensee can request a FERC determination that “any planned, ongoing, or completed investment” in the project during the term of an existing license qualifies under criteria listed in section 36(b)(2) to be considered when FERC sets the term for the project’s next license. 

The positive ruling is expected to help Chelan PUD take actions earlier that bring value for its customers and ensures FERC will consider these significant investments towards a maximum, 50-year term for Rock Island’s new license starting in 2029, the PUD noted.

“A longer license term is good for our customer-owners because it will enable Chelan PUD to contribute to decarbonizing the nation’s electric generation resources for many years to come,” said Chelan PUD General Manager Steve Wright.

Chelan filed request for determination in June

In June, Chelan PUD filed a request for determination at FERC under section 36(c) of the FPA with respect to Rock Island. The project is located near the geographical center of Washington State, on the Columbia River about 12 miles downstream from the city of Wenatchee.

Chelan PUD asked for a determination that project investments, not required by the existing license, made at the Rock Island Project since 1989 -- the start of the term of the existing 40-year license -- meet the criteria under subsection 36(b)(2) to be considered by FERC when it sets the term of the next license for the project. 

Chelan PUD requested early action credit for investments at Rock Island Dam that will total $710 million by 2029, “far beyond the requirements of its 1989 relicensing order,” PUD staff wrote in the application. The measures are:

  • Rebuilding Powerhouse 1 turbines and generators at a cost of $270 million
  • Rebuilding Powerhouse 2 turbines and generators estimated at $352 million
  • Investing $44 million to achieve the Habitat Conservation Plan standard of “no net impact” on salmon and steelhead from dam operations
  • Improving spillway safety with automated gate hoist operations, estimated at $4 million
  • Upgrading office, warehouse and storage facilities to increase efficiency for $40 million

FERC approved more than $600 million of the investments immediately but said more information would be needed for it to make a determination on other parts of the package.

Idea originated more than five years ago

Chelan noted that FERC historically has declined to consider early investments when establishing a new license term. 

More than five years ago, an idea cropped up, Chelan noted: What if investments made before getting a new license were recognized by FERC in determining the next license term? Project benefits could come sooner, and for longer, instead of waiting until the next license.

Chelan PUD staff kept working with hydro industry partners and lawmakers on the change in federal law that Congress eventually passed last fall establishing credit for early action in relicensing.

Chelan PUD’s Wright credited vital support from Northwest lawmakers for the success in getting the early action credit added to the FPA.