Licensee group wins first skirmish over FERC boost in land use fees

A group of nine hydroelectric project licensees has won the first skirmish in a fight against a sharp increase in government land use fees based on a new fee formula by the Federal Energy Regulatory Commission.

The U.S. Court of Appeals for the District of Columbia Circuit granted a stay April 30, 2009, preventing FERC from assessing fees from the nine project operators until there is a full hearing on the merits of the fee increase, or a reconsideration by FERC in the meantime.

The licensees include Idaho Falls, Idaho; Tacoma, Wash.; El Dorado (Calif.) Irrigation District; PacifiCorp; Portland General Electric Co.; Chelan County (Wash.) Public Utility District; Puget Sound Energy; Sacramento Municipal Utility District; and Turlock (Calif.) Irrigation District.

The law firm for the group, Van Ness Feldman of Washington, noted an appeals court considers four factors in ruling on such a stay request: whether the petitioner is likely to prevail on the merits of the appeal; whether the petitioner would suffer irreparable harm without a stay; whether granting a stay would harm other parties; and whether the action is in the public interest.

The licensee group argued that FERC issued the new land use fee rules without allowing notice and comments as required by the Administrative Procedures Act, making the rule invalid. The group also argued that FERC failed to make a finding, required by the Federal Power Act, that the new fee rules would result in reasonable annual charges that would seek to avoid increasing the price to electric consumers.

“Although Licensees recognize that their successful challenge of the Final Rule would result in a refund of any charges paid under that rule, such relief would not cure the immediate, present harm that currently is being inflicted on them as a result of the surprisingly steep increases in FERC’s recently issued 2009 bills,” the petition said. “Licensees simply had no advance notice to plan and budget for the massive increases in annual charges required under the Final Rule. As a result, in the absence of a stay many Licensees will need to implement emergency measures — such as budget cuts and scaling back of important programs — to the detriment of Licensees’ customers, employees, and the public.”

The nine licensees said their new annual land use charges exceed $8 million, nearly $5.5 million more than their bills the previous year and an increase of more than 200 percent. They noted there are another 300 licensees, who did not file an appeal, who are subject to increases.

As an example, the petition said charges for Portland General Electric’s 173-MW Clackamas River project (No. 2195) (HydroWorld 6/28/06) increased to $1.05 million in 2009 from $137,431 in 2008. Charges for SMUD’s 647.726-MW Upper American River project (No. 2101) (HydroWorld 4/22/09) increased to $634,780 in 2009 from $356,133 in 2008.

The appeals court stayed imposition of the new FERC fees on the nine petitioners pending further action of the court or a FERC rehearing order. It did say FERC could impose fees on the nine based on last year’s charges.

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