FERC again rejects challenge, relicenses 49.8-MW School Street

Under orders from a federal appeals court, the Federal Energy Regulatory Commission reconsidered and again rejected a rival licensing proposal, instead reinstating the relicense of Erie Boulevard Hydropower L.P. for the 49.8-MW School Street hydroelectric project.

FERC reaffirmed April 15 that competing developer Green Island Power Authority did not have standing to propose development of the competing 100-MW Cohoes Falls project. Even if Green Island did have standing, FERC said, its cost estimates are unrealistic, making Cohoes Falls not a feasible alternative to School Street.

“A ‘feasible’ alternative is one that is ‘reasonable, likely,’ or ‘capable of being done or carried out,'” the commission said. “… We find that, although the project appears to be feasible from an engineering standpoint, it is not economically feasible, such that we could consider it a reasonable alternative to the School Street project.”

FERC issued a 40-year relicense in 2007 to Erie Boulevard Hydropower for the upgrade and continued operation of School Street (No. 2539), which diverts water from the Mohawk River upstream of Cohoes Falls, bypassing 4,500 feet of riverbed, including the falls, New York’s second tallest. (HydroWorld 12/10/09)

In relicensing the project, FERC rejected several attempts by Green Island to propose the competing 100-MW Cohoes Falls project in lieu of renewing School Street. FERC rejected a preliminary permit application by Green Island (No. 12522), noting the Cohoes Falls project only could be developed if School Street — which has generated power since 1916 — were decommissioned and removed. FERC rejected a 2004 motion by Green Island to intervene, finding the motion was filed 13 years late in the proceeding, which began in 1991.

Responding to Green Island’s appeal of the relicense order, the 2nd U.S. Circuit Court of Appeals said FERC erred by failing to consider a new intervention by Green Island when FERC allowed Erie Boulevard to modify its relicense proposal based on terms of a settlement agreement. The appeals court remanded the case to FERC to consider first whether the settlement agreement was a “material amendment” to the proposed project and, if so, to consider whether Green Island’s motion to intervene is proper and, if so, to consider the Cohoes Falls project proposal.

FERC: Settlement did not trigger new motions to intervene

In 2005, Erie Boulevard filed the School Street relicensing settlement agreement that included installation of an 11-MW turbine, replacing a proposed 21-MW turbine addition. As a result, Green Island had renewed its motion to intervene, contending the settlement constituted a “material amendment” to the relicense application, thereby permitting new intervenors to offer alternative proposals such as the Cohoes Falls project.

Under the court’s mandate to reconsider, FERC declared the changes made by the settlement agreement did not constitute a material amendment because they did not materially alter physical structures of the project or materially alter the project’s flow regime. FERC said it is not required to issue public notice and seek new motions to intervene every time a minor project adjustment occurs during typical licensing proceedings.

“If that were so, the commission would be required to reopen its process with extreme frequency,” it said.

Because there was no material amendment to the project, FERC said it was not obligated to let Green Island intervene. Nevertheless, the commission decided to examine the Green Island proposal under its obligation to ensure that the project FERC licenses is “best adapted” to develop the site. At that point, FERC declared the Cohoes Falls project, with all-new weir, intake, powerhouse, tunnels, and transmission lines, is economically infeasible.

FERC: Green Island cost estimates “unreliable, unrealistic”

“… We find that Green Island’s construction cost is both unreliable and unrealistic,” FERC said. “Green Island’s estimated cost of $923 per kW to develop the Cohoes Falls project is extremely low compared to Idaho National Laboratory’s median cost of $3,700 per kW to develop new capacity at an undeveloped site, as well as Erie’s estimated cost of $2,250 per kW to develop the additional capacity at the School Street project.”

FERC said Green Island estimated the total cost to build Cohoes Falls would be $75 million. However, FERC said the developer failed to include $1 million to acquire New York land and water rights, $1.8 million to decommission School Street, or payment to Erie to acquire School Street, a net investment estimated at $7.9 million.

While Green Island estimates its project would have average annual generation of 300,000 megawatt-hours, FERC staff estimated generation to be only 287,500 MWh. Due to flow restrictions, the 100-MW project would operate at maximum capacity only 26 days per year.

FERC said least-cost alternative power in the region is valued at $41 per MWh. Based on Green Island’s information, FERC said the annual cost of building, operating, and maintaining Cohoes Falls would be $31.19 per MWh, or $9.81 per MWh less than alternative power. However, FERC said, using Idaho National Laboratory’s estimated costs, Cohoes Falls would cost $101.37 per MWh annually, or $60.37 per MWh more than alternative power.

By comparison, FERC said, School Street, with a new turbine, would cost $32.84 per MWh, or $8.16 per MWh less than alternative power and $68.53 per MWh less than Cohoes Falls, based on the Idaho lab’s numbers.

“Green Island’s extremely low estimate makes the Cohoes Falls project appear economically feasible, with positive net benefits, rather than the significantly negative economic benefits that result from using realistic cost information for project construction,” FERC said.

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