House Hydro Bill Tests Water for Broad Energy Deals

Posted April 23, 2013 at 3:15pm

In February, the House did something rare: It passed an energy bill unanimously. Unlike the previous Congress’ standard fare of anti-EPA, pro-drilling measures, the first energy bill of the 113th Congress promoted small-scale hydropower projects and the electrification of existing dams.

In other words, the Republican-controlled House passed a clean-energy bill.

Of course, few Republicans could object on ideological grounds to legislation that aimed to expedite or remove regulatory requirements for expanding hydropower facilities. And it certainly helped that the chamber passed similar legislation in 2012 by a large margin.

Nevertheless, hydropower proponents say that developing the resource represents “low-hanging fruit” that members tired of the partisanship that has permeated energy policy can all agree is worth advancing to President Barack Obama’s desk. Hydropower represented nearly two-thirds — the largest share by far — of domestic renewable-energy production and 8 percent of total U.S. electricity generation in 2011, according to the Energy Information Administration. More than half of that total powered the Pacific Northwest region, and hydro is one of the few renewable resources that can provide baseload electricity — power that is available at all times — to the grid.

But just 3 percent of the 80,000 dams in the United States generate power, representing great potential for growing the resource, according to legislation championed by Reps. Cathy McMorris Rodgers, R-Wash., and Diana DeGette, D-Colo.

“If you can work on regulatory reform for those projects, then you can have small hydro throughout this country,” DeGette said.

The House lawmakers’ legislation would let small hydroelectric facilities generating up to 10 megawatts of power bypass Federal Energy Regulatory Commission licensing requirements that currently apply to projects producing more than 5 megawatts. The bill also would require FERC to study the feasibility of carrying out a two-year hydropower licensing pilot program at unpowered dams and would allow the commission to extend preliminary permits for two additional years.

Jeff Leahey, government affairs director at the National Hydropower Association, said House leaders probably moved the bill so they could promote energy legislation that “checked the boxes” on encouraging the development of a resource that is renewable and reliable. It also helped that the bill — along with another measure passed April 10 that would designate an Interior Department agency as the lead regulator of small federal conduits — moved through the House last Congress and didn’t need much additional work, he said.

A significant factor in the refocused spotlight on the “original renewable” is the new leadership on the Senate Energy and Natural Resources Committee and its representation of key hydropower-producing states. Chairman Ron Wyden, D-Ore., promised industry representatives at the hydropower association’s annual conference this week that he plans to “quickly” mark up hydropower legislation after a panel hearing Tuesday.

Wyden attributes the rise in hydro’s profile to better environmental stewardship on the part of facility operators and a more cooperative relationship between hydropower lobbyists and environmental groups focused on protecting river ecosystems. The effect of dams on fisheries and riverine habitat, as well as operational costs, has compelled organizations to promote the removal of dams in some instances.

“Hydro’s environmental performance has improved dramatically,” Wyden said.

Association President David Moller of Pacific Gas and Electric Co. acknowledged the role that historically low natural-gas prices have played in limiting hydropower expansion in recent years. But he said opportunities for hydropower still flourish because of state renewable portfolio mandates, coal-fired power plants being pushed into retirement and technological advances in powering existing dams and water channels.

“The price of natural gas has dropped, but it will never match hydropower’s fuel price of zero, or its attributes of being renewable and non-carbon-based,” he said.

Hydro proponents in the private sector and in Congress said this week that they will continue to promote hydropower development, possibly in future legislation. That could include examining additional regulatory issues that contribute to long lead times for completing electrified projects or adjusting current benefits that exist for clean power in the tax code. Prospects for he latter — which would involve extending the production tax credit for a multiyear period or making it permanent as Obama proposes — are dim outside a comprehensive tax code overhaul.

“I think at the end of the day, it’s all about making sure that hydropower and the benefits that come from hydropower projects are competitive in the marketplace with other energy projects,” Leahey said.

Whether the bipartisan camaraderie that has surrounded promoting hydropower can translate to moving broader energy legislation is anyone’s guess. But members close to the debate express optimism that the current spate of legislative action could beget compromise in the future.

“I’m not sure we’re any closer to that comprehensive policy, but I’d think that common ground on these issues like hydro can only be helpful,” DeGette said.