On July 2, 2020, FERC staff issued an order granting an exemption from licensing to the City and County of Denver, Colorado, through its Board of Water Commissioners (“Denver Water”) for its Strontia Springs Hydroelectric Project (“Project”).  Prior to FERC issuing the exemption order, Denver Water held an original minor license for the Project, which is located on the South Platte River in Douglas and Jefferson counties, Colorado.

The original minor license for the Project was issued in 1984 and will expire on December 31, 2023.  On January 4, 2019, rather than file an application to relicense the Project, Denver Water filed an application for an exemption from licensing, proposing to increase the Project’s capacity from 1,087 kilowatts (kW) to 1,250 kW.  Sections 405 and 408 of the Public Utility Regulatory Policies Act of 1978 (“PURPA”) provide that FERC may grant an exemption from licensing to projects with an installed capacity of 10 megawatts (“MW”) or less and that use for generation of electricity either a dam that was in existence on or before July 22, 2005 or a “natural water feature” not requiring a dam or impoundment.  In granting the exemption, staff found that the Project, which uses an existing dam and has a proposed generating capacity of 1.2 MW, satisfies these criteria.

An exemption from licensing does not result in the loss of FERC’s jurisdiction over the Project pursuant to the Federal Power Act and FERC’s implementing regulations.  Rather, the purpose of exemptions from licensing is to encourage and expedite the development of qualifying small hydropower projects.  While exemptions do offer an expedited regulatory process compared to licensing, exempted projects are still subject to public notice and comment and environmental review by federal and state resource agencies.  In this case, Denver Water’s exemption application was processed in approximately 18 months.

Although it is relatively uncommon for licensed projects to pursue an exemption from licensing at the end of a license term (rather than a new license through relicensing), the order acknowledged that the Commission’s regulations permit such a scenario, but only where the exemption applicant is the existing licensee.  In 2010, Commission staff issued an exemption to the City of Boulder for its previously licensed Boulder Canyon Project, which is a small conduit hydroelectric project located on the City’s municipal water supply system.  Similarly, in 2014 FERC staff granted exemptions from licensing to two hydroelectric developments that were previously licensed as part of the California Department of Water Resources’ South SWP Project and were located on the licensee’s water distribution system.

FERC’s order is available here.