On May 26, 2020, FERC staff issued an order determining that additional information provided by the South Carolina Public Service Authority (Santee Cooper) was sufficient for FERC to determine that certain investments made over the term of the existing license for the Santee Cooper Project (FERC No. 199) satisfied the criteria under section 36(b) of the Federal Power Act (FPA), and should be considered when the Commission establishes the length of the next license term for the Project.
By way of background, in late 2018, Congress passed the America’s Water Infrastructure Act (AWIA) of 2018 which, among other things, adds a new section 36 to FPA Section 36(b) which provides that the Commission, when establishing the term of a new license “shall give equal weight to:
(1) investments by the licensee to implement the new license under this subchapter, including investments relating to redevelopment, new construction, new capacity, efficiency, modernization, rehabilitation or replacement of major equipment, safety improvements, or environmental, recreation, or other protection, mitigation, or enhancement measures required or authorized by the new license; and
(2) investments by the licensee over the term of the existing license (including any terms under annual licenses) that—
(A) resulted in redevelopment, new construction, new capacity, efficiency, modernization, rehabilitation or replacement of major equipment, safety improvements, or environmental, recreation, or other protection, mitigation, or enhancement measures conducted over the term of the existing license; and
(B) were not expressly considered by the Commission as contributing to the length of the existing license term in any order establishing or extending the existing license term.
Santee Cooper filed a request on October 8, 2019 for a determination under section 36(c) of the Federal Power Act that certain Project investments made over the term of the existing license meet the criteria set forth in subsection 36(b)(2), such that the investments should be considered when the Commission sets the next license term for the Project. In Santee Cooper’s request to the Commission, it provided information on 11 investments made during the Project’s license term, dating back to the mid-1980s and totaling approximately $99 million dollars. The request included documentation of the work undertaken and associated costs for each investment.
On December 3, 2019, the Commission issued an order on Santee Cooper’s request (see December 11, 2019 edition of the WER). The Commission’s December 3 Order found that most of the investments met the requirements of FPA section 36(b)(2)(A) because they “resulted in redevelopment, new construction, new capacity, efficiency, modernization, rehabilitation or replacement of major equipment, safety improvements, or environmental, recreation, or other protection, mitigation, or enhancement measures conducted over the term of the existing license.” However, the Commission determined that additional information was needed for it to make a determination as to whether four other investments—replacement of the upper miter gate of the Jeffries Lock; repair of the lower miter gate at Jeffries Lock; upgrade and replacement of the stoplog, slide gate, and guide at the Jeffries Hydroelectric Station; and replacement and repair of the tainter gate valves and lower miter gate at the Jeffries Lock—met the section 36(b)(2)(A) criteria. The Commission invited the Authority “to provide additional information to clarify aspects of the investment, if any, that enhanced the project beyond repairs and replacements necessary to ensure continued operation of the project.”
On March 26, 2020, Santee Cooper filed supplemental information related to these four investments. The supplemental information included additional information about the need for each investment, the scope of the work completed, and its cost.
In a May 26, 2020 order, Commission staff determined that the additional information provided by Santee Cooper was sufficient for staff to determine that these investments satisfied the criteria under section 36(b) of the FPA. In describing the basis for the determination, cited the statutory requirement that investments must “result[] in ‘redevelopment, new construction… rehabilitation or replacement of major equipment [or] safety improvements.’” Here, Commission staff found that Santee Cooper’s four investments satisfied the criteria because they improved project safety. Therefore, the Commission will be required to consider these investments—in addition to the six it previously determined meet the criteria of section 36(b)—when issuing the next license term for the Santee Cooper Project.
The May 26 order is available here.