OREC Member Gains Relief at FERC

Last week, one of OREC’s members, Verdant Power obtained temporary relief from FERC’s licensing requirements as reported in our press release,  FERC OK’s Testing New Kinetic Hydropower Plant in New York City’s East River.   The FERC’s order can be viewed here (PDF) and we’ve reprinted our press release (which also appeared in Renewable Energy Access on July 29, 2005):

The Federal Energy Regulatory Commission (FERC), granted Verdant Power, LLC’s request to clarify that they do not require a license to deploy, on a short term (18 months), experimental basis, six 36 kW tidal power turbine units that will temporarily supply power to two customers on New York City’s Roosevelt Island, at no cost. Verdant had argued that it needed to install projects and connect them to actual customers to study and evaluate how they would operate in real world conditions. Verdant will use the results of its second 18- month study to enable them to complete its application for a FERC license. 

The Federal Power Act normally requires any hydropower project that
impacts interstate commerce to obtain a FERC license, which can take up
to three years to issue. Under FERC’s traditional test, a project is
deemed to "impact" commerce when it either supplies or displaces even a
diminutive amount of power into the grid. In the absence of FERC’s
ruling, Verdant’s
six-unit deployment and supply of power would have been found to impact commerce and Verdant would have required a license.

As the Verdant case demonstrated, FERC’s strict license requirement
created a "catch-22" for developers of emerging kinetic hydropower
technologies, who often need to install their projects to study and
evaluate their efficiency and impacts, in order to complete a license
application. By allowing tidal and wave developers to move forward with
experimental projects, without obtaining a full license, FERC’s order
will facilitate collection of data that can help FERC make a reasoned
decision on whether or not to grant licenses.

In a separate concurrence, Commissioner Kelly recognized that the
Federal Power Act’s licensing requirements were never intended to apply
to experimental projects. Kelly explained:

"Verdant Power’s project is experimental and the facilities are to be
utilized for a short period of time for conducting studies necessary to
prepare a license application. Second, the very nature of Verdant’s
project is one that requires a ‘jump start’ from the grid, in order to
be tested…the potential for displacement of grid power is a necessary
consequence for demonstration."

This decision clarifies and supports the FERC Commissioners earlier
"Verdant ruling" of April 13th and the FERC news release "Commission
Order Aims to Promote Development of New Submarine Hydropower
Technology." In that release, former FERC Chairman Pat Wood stated "The
Commission did its part to encourage the development of new electric
generation technologies by providing regulatory relief. We need to
ensure that new ideas are fostered and not impeded by existing
requirements."

It bears noting that FERC’s order does not permit Verdant to move
forward without any regulatory oversight. Even though Verdant has been
relieved, for now, of obtaining a license, it still must comply with
New York State permitting requirements.

Barring further delays, the turbines and associated hydroacoustic
arrays for monitoring fish and other aquatic species, will be deployed
in two phases. The first deployment will include two turbine units, and
at least 12 hydroacoustic transducers (planned for November 2005)
focused on these two turbines and on far field fish movements, upstream
and downstream, of the turbines.

"FERC has taken a solid look at the facts and delivered an insightful
decision;" stated Trey Taylor of Verdant Power. "While this decision
covers the narrow regulatory issues associated with our project, it
also represents a broader look at the issues surrounding the deployment
of new emerging kinetic hydroelectric generating technologies that have
very low, or virtually no environmental impacts."

Carolyn Elefant, CEO of OREC, a trade association for the ocean energy
industry, was pleased that Verdant had won this important precedent,
and is cautiously optimistic about its future impacts. Said Elefant
"FERC’s decision, while extraordinarily beneficial to Verdant and other
similarly situated kinetic hydropower developers, is also limited to a
narrow set of facts. As I read FERC’s order, jurisdictional wave and
tidal projects can escape, or defer, licensing only for a short time,
only when the project does not generate revenue, and only where the
purpose of the experiment is to gather data that will ultimately be
used in support of a license application. To read FERC’s order as
granting a full exemption from licensing for wave, tidal and other
experimental projects would be inaccurate. FERC’s order is therefore a
start, but much still remains to be done to expedite and streamline the
permitting process for wave and tidal projects. We’re on the verge of a
new era in electricity production-our laws and regulations are
reflecting the environmental and efficiency benefits we will soon gain."

Posted by Ocean Renewable on August 2nd, 2005 filed in FERC Watch