FERC asked to accelerate eight hydro licenses to obtain tax credits

Hydro developer Free Flow Power Corp. has asked the Federal Energy Regulatory Commission to expedite the licensing of eight hydroelectric projects so that they might qualify for federal investment tax credits before a deadline at the end of 2013.

Free Flow filed requests with FERC in response to action by Congress Jan. 1 extending by one year the qualification period for production tax credits or investment tax credits for renewable energy sources including some hydropower. The extension was part of a deal to avoid the budgetary “fiscal cliff.”

“… There has been a significant change in the financial projections for these projects,” Free Flow General Counsel Daniel Lissner wrote. “As a part of the fiscal cliff extenders bill, Congress has passed legislation that allows hydropower facilities that commence construction before the end of 2013 to claim the Renewable Energy/Investment Tax Credit (ITC). The ITC would allow these projects to benefit by up to 30 percent of qualified facility costs and leads to a meaningful change in the economics of these projects.”

Although tax regulations to govern the specifics of qualifying for the ITC have not been completed, Free Flow said the hydropower industry anticipates that a project can qualify for the 30 percent cost reduction if 5 percent of its construction costs can be spent in 2013.

Although FERC issued preliminary licensing schedules for the projects that extend well into 2014, Free Flow asked that FERC expedite the process so that seven of the projects could be licensed by late summer 2013, while the eighth could be licensed by September 2013. The developer acknowledged there are a significant number of steps to be performed in each licensing process.

“This is a tall order,” Lissner wrote. “However, to the extent that these steps can be conducted in a time frame that could accomplish license issuance by the late summer (or in one case the early fall) of 2013, that may provide the required time frame for FFP to commence construction of the projects and qualify for the ITC.”

Seven of the projects, totaling 25 MW, are on state-owned dams on the Muskingum River in Ohio. They include:

  • 3-MW Beverly Lock and Dam (No. 13404) at Muskingum River Lock and Dam 4, in Washington County;
  • 4-MW Devola Lock and Dam (No. 13405) at Muskingum River L&D 2, in Washington County;
  • 4-MW Malta/McConnelsville Lock and Dam (No. 13406) at Muskingum River L&D 7, in Morgan County;
  • 5-MW Lowell Lock and Dam (No. 13407) at Muskingum River L&D 3, in Washington County;
  • 3-MW Philo Lock and Dam (No. 13408) at Muskingum River L&D 9, in Muskingum County;
  • 4-MW Rokeby Lock and Dam (No. 13411) at Muskingum River L&D 8, in Morgan County; and
  • 2-MW Zanesville Lock and Dam (No. 13412) at Muskingum River L&D 10, in Muskingum County.

The eighth project is the 4-MW Williams Dam project (No. 13346) to be built on Williams Dam, which is owned by the Indiana Department of Natural Resources, on the East Fork White River in Lawrence County, Ind. Free Flow filed a license application for the project in December on behalf of PayneBridge LLC.

Free Flow said most of the projects appear unlikely to raise significant controversy that might delay licensing. It said some of the projects could be delayed if issues arise during scoping or environmental assessment.

The developer said the Zanesville project might be subject of some controversy due to stakeholder concerns about its compatibility with boater safety and recreational access.

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