FERC updates hydroelectric project land use fees for 2015

FERC Seal

The Federal Energy Regulatory Commission has issued the 2015 annual update to its fee schedule for occupation of federal lands by FERC-licensed hydroelectric projects.

In 2013, the commission issued a final rule (RM11-6) revising its formula for calculating government land use fees for FERC-licensed projects. At that time, FERC said the changes would increase the total amount collected in annual rents by less than 1 percent, although some licensees would experience higher rates, and some lower, depending on the circumstances where a project is located.

FERC published the latest annual update Jan. 20 in the Federal Register, listing the per-acre rental fees for federal land on a per-county basis, or based on other geographic areas in Alaska and Puerto Rico.

The fee schedule is based on a formula with the following components: a per-acre land value by county (or geographic area in Alaska and Puerto Rico); an "encumbrance factor"; a 5.27 percent rate of return that converts the land value to a rental value; and an annual inflation adjustment.

The encumbrance factor multiplies the land value by 50 percent reflecting the degree to which project facilities hinder other uses of the land. That represents a reduction from the old formula, whose encumbrance factor multiplier was 70 percent.

FERC assesses annual charges for federal land use by more than 250 licenses held by about 135 licensees. It previously said, under its 1987 fee schedule, 2013 collections were estimated to total $8.22 million. Under the new rules, collections are estimated to exceed $10 million.

After FERC collects the fees, they are allocated 12.5 percent to the U.S. Treasury, 50 percent to the federal reclamation fund, and 37.5 percent to the states in which the projects are located.

The commission granted a petition in 2013 by eight hydropower licensees with projects in four states that challenged the levying of federal land use fees on hydroelectric projects for land the federal government no longer owns. The challenge related to those situations in which the federal government actually transferred some lands to the licensee or another owner but retained a power site reservation.

The update may be obtained from Federal Register's Internet site under https://www.federalregister.gov/articles/2015/01/20/2015-00429/annual-update-to-fee-schedule-for-the-use-of-government-lands-by-hydropower-licensees.

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