Securing federal approval for hydroelectric generation projects demands time and expertise because stakeholders merit a say in the process and the resource considerations can be complex.

The Federal Energy Regulatory Commission (FERC) is an independent agency that regulates the interstate transmission of electricity, natural gas, and oil. FERC also issues hydropower licenses after careful consideration of the environmental and social impacts of a project. Through a variety of licensing avenues, FERC seeks input from property owners, public and agency stakeholders, and Native American tribes.

Over the past two years, Olsson helped one of our Colorado clients obtain an exemption from licensing, which is another option available to small hydropower projects that meet certain requirements. Exemptions follow an expedited regulatory process, but they still undergo rigorous review and provide opportunities for stakeholder comments.

Denver Water maintains a network of reservoirs, pipelines, and treatment plants that deliver water to 1.5 million people in Colorado’s largest metropolitan area. Run by the Board of Water Commissioners, the state’s oldest utility also operates multiple hydroelectric plants that generate energy as stored water is released through dams.

In 2018, Denver Water contracted Olsson after the utility determined it needed to replace the electrical instrumentation and controls system, along with an existing turbine and generator, at Strontia Springs Reservoir. The reservoir stores water from the South Platte River and diverts it into a 3.4-mile tunnel under the mountains to the Foothills Water Treatment Plant.

A decision to replace the equipment was made because of the age and obsolescence of the system, the risk of equipment failure, and the need to comply with the latest design and safety standards. No repair, reconstruction, or other modification to the dam was proposed as part of the project update.

At the time we were brought in, Denver Water held an original 40-year license for the hydroelectric project that was set to expire at the end of 2023. Rather than file an application to relicense the project, we helped Denver Water complete what is formally called an Application for Exemption of Small Hydroelectric Power Project from Licensing. In its application, Denver Water proposed to increase the capacity of the project from 1,087 kilowatts (kW) to 1,250 kW. Under federal regulations, FERC is authorized to exempt small hydroelectric projects like Strontia Springs with an installed capacity of 10 megawatts (MW) or less.

Members of Olsson’s Environmental team helped write the application and compile supporting documents in about eight months. The application provided a project overview and details about the proposed construction and power generation. It also described the environmental setting of the project, including vegetative cover, fish and wildlife resources, water quality and quantity, land and water uses, recreational uses, historical and archaeological resources, and scenic and aesthetic qualities.

The application included the expected environmental impact from construction and operation of the project, and an explanation of the specific measures proposed by Denver Water and requested by the agencies to mitigate the impacts. Olsson coordinated closely with Denver Water’s project engineers on a set of drawings showing the structures and equipment. We also produced a map depicting the proposed expansion to the FERC project boundary. 

Our team worked as an extension of Denver Water’s environmental and engineering teams, assisting with public outreach, and helping the utility host a joint stakeholder meeting and site visit. We supported consultations with multiple agencies, including the U.S. Forest Service, U.S. Fish and Wildlife Service, Colorado Parks and Wildlife, and the Colorado Department of Public Health and Environment. We also helped Denver Water consult with the Colorado State Historic Preservation Officer on behalf of FERC.

Olsson e-filed the final application for exemption on behalf of Denver Water on January 4, 2019. On July 2, 2020, FERC issued an order granting exemption from licensing based on the project size falling below 10 MW. Unlike other FERC licenses that remain in effect for a term of years, exemption orders are issued in perpetuity.

Olsson is now working with Denver Water to address some of the administrative provisions of the order.

So, why would a hydropower operator seek an exemption versus filing a relicensing application?

To be clear, an exemption order does not remove FERC’s jurisdiction over a project pursuant to the Federal Power Act and federal implementing regulations. Exemptions afford applicants an expedited regulatory process compared to licensing; however, exempted projects remain subject to public notice, public and agency comment, and environmental review by resource agencies.

According to an article in the Washington Energy Report, it is relatively uncommon for licensed projects to seek an exemption instead of renewing an existing license. But Denver Water saw an opportunity to achieve its goals for Strontia Springs with an exemption, and we assisted the utility through every step of the process. With Olsson’s experience in this regulatory area, we can help hydropower operators determine if an exemption from licensing is the best option for them.