FERC rejects town’s bid to restart permitting for Meldahl

The Federal Energy Regulatory Commission has rejected an application by the city of Augusta, Ky., to restart the preliminary permit process for a hydro project at Meldahl Locks and Dam on the Ohio River. The U.S. regulator ruled it is in the public interest to give competitors an opportunity to develop the long-delayed project.

Earlier this year, FERC rescinded the Electric Plant Board of Augusta’s license for a 68.775-MW Meldahl project (No. 10395) because the city failed to begin construction on a timely basis despite deadline extensions that totaled 10 years. (HNN 3/21/06)

Now, citing competition from other entities, FERC rejected both the city’s new permit application and a notice of intent to file a license application for a 77-MW version of Meldahl (No. 12657) at the Corps of Engineers’ Captain Anthony Meldahl Locks and Dam near Foster, Ky.

“We believe that it is in the public interest to allow other entities the opportunity to develop the Meldahl site, rather than once again reserving the site for some period of years to Augusta, which has hitherto not shown the ability to move forward with the project,” FERC said May 18.

E.ON U.S. Hydro 1 LLC, a unit of E.ON U.S. LLC, an energy services company that also owns Louisville Gas &Electric Co., filed an application for a preliminary permit to study a 93-MW project (No. 12658) at the site. The city of Hamilton, Ohio, which previously competed with Augusta for a Meldahl license, filed an application for a preliminary permit to study a 114-MW project (No. 12667).

In choosing among competing applicants, FERC rules give preference to municipal applicants — such as Augusta or Hamilton — if FERC determines the competing proposals otherwise are equal. However, FERC did not find the proposals to be equal and said if it accepted a license application from Augusta it might well trump the other permit applications, which would not serve the public interest.

“We therefore reject Augusta’s application for preliminary permit and its notice of intent, and will proceed to process the two remaining permit applications,” FERC said.

Augusta lawyer: FERC action “punitive”

Donald Clarke, the lawyer for Augusta’s licensing agent, AJS Hydro Corp., said the ruling came as a complete surprise and that Augusta is reviewing its options.

Clarke, of the Washington law firm GKRSE, said FERC acted in a pre-emptive manner, without a motion from potential competitors. As yet, he said, the city finds no basis to say anything other than the commission’s action was unfair and arbitrary.

“Augusta accepted the termination of the prior Meldahl license because it appeared that whatever flexibility was available under the commission’s start of construction requirements had been exhausted,” Clarke said. “Rather than demand some extraordinary relief, Augusta decided it was best — at least from the commission’s perspective — to start anew with a separate licensing proceeding, allowing for the possibility of competition.”

Having proceeded in good faith in compliance with FERC requirements, including preparing a pre-application document and scheduling a joint consultation meeting, Augusta finds the commission affirmatively blocking its efforts, Clarke said.

“Far from nurturing competition and compliance with its rules, this action seems punitive and — as far as I can tell — unprecedented. I can only hope that the commission will rectify this matter on rehearing,” Clarke added.

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