This comment analyzes the Federal Power Act in light of FERC's calimed authoity under the Policy Statement, and argues that FERC possesses the authority to deny a license or to impose uneconomic conditions in fulfilling its statutory duty to protect the public interest.

This comment explores the legal theory behind the FPA to demonstrate that environmental protection has been an inherent aspect of the hydropower licensing process. Secondly, the attempt of the 1986 ECPA amendments to coerce greater FERC consideration of fish and wildlife values into the procedure is evaluated. Finally, the future of hydropower licensing is examined in the context of policy decisions embodied in the final rule.

We studied six interagency negotiations covering Federal Energy Regulatory Commission (FERC) hydroelectric power licenses. Negotiations occurred between state and federal resource agencies and developers over project operations and natural resource mitigation. We postulated that a balance of power among parties was necessary for successful negotiations. We found a complex relationship between balanced power and success and conclude that a balance of power was associated with success in these negotiations. Power played a dynamic role in the bargaining and illuminates important considerations for regularoty design.

We investigated the "need to negotiate" in a comparative case study of multi-agency negotiations in the FERC licensing process. Researchers interviewed participants in tow cases involving environmental consultations and asked about parties' level of need to negotiate throughout the process. Participants identified a need to negotiate, and when this need was strongly felt, there was an increased opportunity for an agreement to be reached. An intense need to negotiate by all parties is not a prerequisite to successful agreements. When key participants have a strong need to negotiate, they can instigate negotiations and encourage the involvement of other parties.

By the close of the December 31, 1991, deadline, the licensees of 158 hydroelectric plants, totaling roughly 2,000 megawatts of installed capacity, had filed applications for relicense with the Commission. Though we on the Commission staff will now need to consider many aspects of each proposal, the most controversial aspect we'll face is how to choose among competing uses of each waterway. In this paper, I'll present both the theories that guide how we select among applicants' proposals and alternative proposals and the methods we use to make these choices. After discussing the theory and methods, I'll give examples from two recent environmental assessments to show how we choose the license option that we think gives the greatest benefit to the public. This way, you'll see how we apply these methods, what aspects are important, and what difficulties we face in making these choices.

In this paper, I discuss how we on the Commission staff use economic principles to evaluate relicense proposals and how we use the results of our economic and environmental studies to choose the option that we think gives the greatest benefit to the public. I'll describe the two kinds of project changes applicants often propose--environmental enhancements and power improvements. And I'll talk about how we decide among the applicants' proposals and alternative proposals that we, the agencies, and the interveners make: the baseline we use to compare them, how many alternatives we consider, and the three methods we use. After this, I'll give you two examples of choosing among relicense proposals: this way, you'll see how we apply the method we use the most and what difficulties we face in making these choice. This paper is and outline instead of a detailed manual. It's intended both for us and for those of you outside the Commission. When we evaluate relicense applications, this paper will help us organize our studies. If you are involved in relicensing outside the Commission, I think this paper will help you in two ways: you'll understand better how we look at relicense proposals and you'll be able to make a better case for the proposal you think gives the greatest benefit to the public.

The two methods [FERC] now uses to evaluate the economic value of power from hydro projects have evolved through the years and generally conform to techniques set forth in the Principles and Standards, which the Water resources Council published as final rules in September 1980. Both methods attempt to quantify how an electric power system's future costs would differ with and without a proposed or existing hydro project. The two methods: 1. Simulated market price (often called marginal price, avoided cost, or incremental cost in the electric utility industry) 2. Cost of the most likely thermal alternative

This article presents results from a case study of hydropower licensing, a program that was transformed during the period 1978-1988. New legislation promoted extensive development of hydropower projects and stimulated reactions by a threatened environmental community. The Federal Energy Regulatory Commission altered virtually every significant aspect of its licensing program in response to these external pressures. More than remarkable adaptability, this case demonstrates that regulatory institutions may yield their discretionary powers in order to maintain productivity and responsiveness. While they are closely related in most regulatory situations, productivity and responsiveness are sometimes incompatible. When such a conflict occurs, this research suggests that the agency may sacrifice a degree of productivity to maintain responsiveness. This study also shows that through the creative use of familiar regulatory tools, notably rule making and negotiation, an agency can enlist external agencies and groups in its efforts to be productive and responsive.

We studied the role of technical clarity in successful multi-party negotiations. Our investigations involved in-depth interviews with individuals who were the principal participants in six consultations conducted under the Federal Energy Regulatory Commission's (FERC) hydroelectric power project licensing process. Technical clarity was especially important in the cases we studied because they concerned questions that were science-based. The principal issues in the six cases were fish passage, instream flow for fish habitat, and entrainment of fish in hydropower turbines. We concluded that technical clarity was one of the most critical elements in these conflicts. The most successful negotiations were marked by a shared understanding of technical issues among the parties.

This report has been prepared at the request of EPA to provide an economic analysis of: 1) the costs to Tacoma of the mitigation measures I have been asked by EP to analyze (the "EPA straw man" mitigation measures), 2) how those costs would affect the total cost of Cushman Project generation and any required replacement generation, and 3) the consequences for TCL and its ratepayers of those costs. This report does not address either the environmental or economic benefits of the proposed mitigation measures, such as fishery and recreation benefits, which FERC will be obligated to consider in any Cushman licensing decision.
The proposed mitigation package would increase the cost of electricity produced at Cushman and reduce the amount of electricity generated at Cushman, without substantial rate increases and without jeopardizing Tacoma's competitive position in a deregulated market.