The Federal Energy Regulatory Commission announced proposed plans to refuse to issue additional preliminary permits for hydrokinetic projects on the lower Mississippi River between Cairo, Ill., and the Gulf of Mexico.
Director Jeff Wright of FERC's Office of Energy Projects announced the proposal in an April 1 show cause letter to Free Flow Power Corp. and Northland Power Mississippi River LLC. Between them the two developers hold, or have applied for, preliminary permits for 141 project sites covering all but a few miles of the 850-mile reach of the river.
Both developers responded to the letter, strongly opposing a shutdown of permitting on the lower Mississippi.
"Given the number and scope of these permit applications, and the fact that it appears unlikely, as a pragmatic matter, that either applicant will be able to develop and file license applications for more than a small percentage of these sites during the preliminary permit term, commission staff is concerned that the Federal Power Act's goal of promoting competition in the comprehensive development of the nation's waterways would not be furthered by issuing to two applicants such a large number of permits covering such an expansive portion of a single river," Wright wrote.
"Therefore, the commission staff intends to decline to issue additional permits on this stretch of river, and instead allow potential developers to advance their projects through the commission's licensing process."
FERC noted Free Flow Power or its subsidiaries recently applied for permits at 105 sites on the Mississippi, in addition to 24 active permits they already hold on the Mississippi. Meanwhile, it said, Northland Power has applied for 40 permits on the reach, 28 competing with Free Flow applications, plus another 12 new sites.
FERC and the U.S. Coast Guard signed a letter of understanding in 2010 to cooperate on licensing of the first five of 55 hydrokinetic projects proposed for the Mississippi River by Free Flow Power. At that time, Free Flow was pursuing development of dozens of hydrokinetic projects on the Mississippi and Missouri rivers offering thousands of megawatts.
Free Flow: Plan would devastate FFP ability to seek licenses
In an April 29 response, Free Flow Power said it currently has before the commission 41 applications to renew previous permits on the Mississippi River that expired after three years. The developer said it has invested considerable time, resources, and capital in studying the 41 sites to prepare license applications. However, it said the pre-filing requirements of FERC's Integrated Licensing Process take more time to complete than the three years of an initial preliminary permit.
"... the action contemplated by the show cause notice would do more than simply roll back the number of permits on the river: It would devastate FFP's ability to follow through with license applications for projects in which it has already invested significant investment dollars and diligent efforts under initial permits," Ramya Swaminathan, FFP's chief operating officer, wrote. "We do not believe this is an outcome that the commission wants or intended."
FFP said it is premature for FERC to conclude that the developer will be able to file license applications for only a "small percentage" of sites, as Wright had concluded.
"It would be a radical departure from existing precedent for the commission to prejudge which permits are likely to result in a license application and which are not," Swaminathan wrote.
FFP said hydrokinetic generation involves gathering more dispersed energy across larger areas than conventional hydropower. It said neither the number of sites nor the number of river miles is a meaningful measure of the magnitude of FFP's proposed developments.
"As far as we know, every other developer (than FFP and Northland Power) of smaller scale hydrokinetic sites has either abandoned or significantly curtailed their development activities," Swaminathan wrote. "We believe that at least one reason for this is that their approach does achieve the scale necessary to justify investment in the regulatory process.
"The effect of the policy change proposed by the commission in the show cause notice would be to punish two of the very few hydrokinetic developers who have identified a commercially viable path to development and to strand the investment of one of these two after three years of aggressively pursuing a process developed in close cooperation with the commission staff and stakeholders."
Free Flow withdraws 58 permit applications
However, in deference to FERC's objective to promote competition, Free Flow Power immediately withdrew 58 of 60 applications for new sites on 419 miles of the Mississippi, which had been filed Jan. 10. It also chose not to renew its permits for five other sites.
At the same time, it asked FERC to renew permits for the 41 sites whose permits expired in December 2010 and January and February 2011. It also asked FERC to approve its applications for two remaining new sites on the Mississippi, Projects No. 14012 and 14018, because FFP is cooperating with the Mississippi Department of Transportation to power bridges spanning the river.
"Nor do we object to the issuance of first time preliminary permits to Northland Power," Swaminathan wrote. "Indeed, we think the issuance of these initial permits to a competitor encourages development of the hydrokinetic resource in a way that is consistent with the commission's mandate to foster competition."
Northland: Plan would reverse FERC hydrokinetic permit policy
In a May 2 response, Northland Power Mississippi River said the commission may not deny a preliminary permit arbitrarily and capriciously under the Administrative Procedure Act.
"Here, the commission's proposal to decline to issue any preliminary permits for the Mississippi River sites is inconsistent with the commission's (1) past precedent on issuance of successive permits and (2) policy of promoting competition and limiting site banking articulated in the Notice of Inquiry and Policy Statement Preliminary Permits for Wave, Current and Instream New Technology Hydropower (February 15, 2007)," Northland's attorney, Carolyn Elefant, wrote."
"In addition, the commission's proposal to decline issuance of permits puts NPMR at a competitive disadvantage to other companies that were previously issued permits on the Mississippi and have had an opportunity to study the sites," Elefant added.
Northland Power Mississippi River noted its parent firm, Northland Power Inc. of Canada, has been operating its Kinetic Energy Recovery Turbine (TREK) technology in the St. Lawrence River at Montreal for a year. It said, in choosing among competing hydrokinetic applications, FERC should look at the state of the applicants' technology, which in Northland's case, is one of the few operating hydrokinetic projects worldwide.
"Refusing to issue any permits for the Mississippi will prevent NPMR from moving forward in the United States and will stifle the very competition and innovation that the commission seeks to promote," Elefant wrote.
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