[Senate Report 115-250]
[From the U.S. Government Publishing Office]
Calendar No. 417
115th Congress Report
SENATE
2d Session 115-250
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RELIABLE INVESTMENT IN VITAL ENERGY REAUTHORIZATION ACT
_______
May 21, 2018.--Ordered to be printed
_______
Ms. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 1336]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 1336) to amend the Energy Policy Act of
2005 to reauthorize hydroelectric production incentives and
hydroelectric efficiency improvement incentives, and for other
purposes, having considered the same, reports favorably thereon
without amendment, and recommends that the bill do pass.
Purpose
The purpose of S. 1336 is to reauthorize hydroelectric
production incentives and hydroelectric efficiency improvement
incentives, and for other purposes.
Background and Need
Hydropower is the nation's largest renewable energy
resource--providing reliable and inexpensive power to more than
30 million homes. In recent years, there has been increased
interest in small hydroelectric project development, and in
2013, legislation was enacted to streamline the development of
small hydro and conduit hydroelectric projects (Public Law 113-
23). With only three percent of the nation's existing 80,000
dams currently generating electricity, there is growing
interest in adding hydropower capacity to non-powered dams. As
outlined in its 2016 report, Hydropower Vision, the Department
of Energy found that hydropower in the United States could grow
from 101 gigawatts (GW) of capacity to nearly 150 GW by 2050.
Under this modeled scenario, this capacity growth would result
from a combination of 13 GW of new hydropower generation
capacity (upgrades to existing plants, adding power at existing
dams and canals, and limited development of new stream-
reaches), and 36 GW of new pumped storage capacity.
The Energy Policy Act of 2005 (Public Law 109-58)
established two hydropower incentive programs. As explained in
the Department of Energy's testimony at the December 5, 2017,
hearing, hydropower production incentives ``are paid to
qualifying hydropower facilities based on the amount of
electricity they generate,'' while hydropower generation
efficiency incentives ``support capital improvements to
existing hydropower facilities that increase their
efficiency.'' S. 1336 reauthorizes both programs through fiscal
year 2027.
Legislative History
Senator Gardner introduced S. 1336 on June 12, 2017. The
Subcommittee on Energy conducted a hearing on S. 1336 on
December 5, 2017. Similar language was included in section 3010
of S. 1460, the Energy and Natural Resources Act of 2017 (Cal.
162).
Companion legislation, H.R. 3256, was introduced by Rep.
McKinley and five cosponsors on July 14, 2017, in the House of
Representatives and referred to the Committee on Energy and
Commerce.
In the 114th Congress, Senator Gardner introduced similar
legislation, S. 1270, on May 11, 2015. The Energy and Natural
Resources Committee conducted a hearing on S. 1270 on May 19,
2015. The measure was also included in section 3002 of S. 2012,
the Energy Policy Modernization Act of 2016, which the Senate
passed, as amended, on April 20, 2016.
The Committee on Energy and Natural Resources met in open
business session on March 8, 2018, and ordered S. 1336
favorably reported.
Committee Recommendation
The Senate Committee on Energy and Natural Resources, in
open business session on March 8, 2018, by a majority voice
vote of a quorum present, recommends that the Senate pass S.
1336.
Senator Lee asked to be recorded as voting no.
Section-by-Section Analysis
Section 1 sets forth the short title of the bill.
Section 2 reauthorizes through fiscal year 2027 the
incentives for hydroelectric production and hydroelectric
efficiency improvements that were originally established in
sections 242 and 243 of the Energy Policy Act of 2005 (Public
Law 109-58).
Cost and Budgetary Considerations
The following estimate of the costs of this measure has
been provided by the Congressional Budget Office:
Summary: S. 1336 would authorize appropriations for the
Department of Energy (DOE) to make payments to owners or
operators of certain hydroelectric facilities. Assuming
appropriation of the authorized amounts, CBO estimates that
implementing S. 1336 would cost $43 million over the 2018-2023
period.
Enacting the bill would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
CBO estimates that enacting S. 1336 would not increase net
direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
S. 1336 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Estimated cost to the Federal Government: The estimated
budgetary effect of S. 1336 is shown in the following table.
The costs of the legislation fall within budget function 270
(energy).
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By fiscal year, in millions of dollars--
----------------------------------------------------
2018 2019 2020 2021 2022 2023 2019-2023
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INCREASES IN SPENDING SUBJECT TO APPROPRIATION
Authorization Level........................................ 10 10 10 10 10 10 50
Estimated Outlays.......................................... 0 4 9 10 10 10 43
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The bill would authorize the appropriation of $10 million
in 2018. CBO does not estimate any outlays for that
authorization because appropriations for 2018 have already been
enacted.
Basis of estimate: For this estimate, CBO assumes that S.
1336 will be enacted near the start of fiscal year 2019 and
that the amounts will be provided each year beginning in 2019.
S. 1336 would authorize the appropriation of $10 million
annually over the 2018-2027 period for DOE to provide payments
to nonfederal owners and operators of certain facilities that
generate and sell hydroelectric energy. Such payments would
equal 1.8 cents per kilowatt hour of electricity generated by
qualified facilities that use a turbine or other power-
generating device that was added to a dam or conduit that was
completed before August 8, 2005. Under the bill, to qualify for
incentive payments facilities would need to begin operating
before August 8, 2025, owners and operators could receive such
payments for up to 10 years.
For 2018, the Congress has provided nearly $7 million for
payments that would be reauthorized under the bill; for this
estimate. CBO assumes no further funding will be provided this
year. Assuming appropriation of the authorized amounts over the
2019-2027 period, CBO estimates that implementing S. 1336 would
cost $43 million over the 2018-2023 period covered by this
estimate and $47 million after 2023. That estimate is based on
historical spending patterns for existing activities.
Pay-As-You-Go considerations: None.
Increase in long-term direct spending and deficits: CBO
estimates that enacting S. 1336 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2029.
Mandates: S. 1336 contains no intergovernmental or private-
sector mandates as defined in UMRA.
Estimate prepared by: Costs: Megan Carroll; Mandates: Jon
Sperl.
Estimate reviewed by: Kim P. Cawley, Chief, Natural and
Physical Resources Cost Estimates Unit; H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 1336.
The bill is not a regulatory measure in the sense of
imposing Government-established standards or significant
economic responsibilities on private individuals and
businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 1336 as ordered reported.
Congressionally Directed Spending
S. 1336, as ordered reported, does not contain any
congressionally directed spending items, limited tax benefits,
or limited tariff benefits as defined in rule XLIV of the
Standing Rules of the Senate.
Executive Communications
The testimony provided by the Department of the Energy at
the December 5, 2017, hearing on S. 1336 follows:
Testimony of Under Secretary Mark Menezes, U.S. Department of Energy,
Before the U.S. Senate Committee on Energy and Natural Resources
Subcommittee on Energy
S. 1336--Reliable Investment in Vital Energy Reauthorization
This bill reauthorizes hydropower production and efficiency
upgrade incentives established in the Energy Policy Act of 2005
for an additional 10 years. Hydropower production incentives,
which are paid to qualifying hydropower facilities based on the
amount of electricity they generate, are reauthorized from 2018
through 2027. Hydropower generation efficiency incentives,
which support capital improvements to existing hydropower
facilities that increase their efficiency, are likewise
reauthorized from 2018 through 2027.
Hydropower has significant capabilities to support economic
competitiveness and electricity system reliability by providing
low-cost, flexible generation. The recent Staff Report to the
Secretary on Electricity Markets and Reliability found that
while some hydropower plants are operated as baseload
resources, many also support the dynamic behavior of grid
operations by providing a full range of ancillary services.
This flexibility has historically complemented other
traditional forms of baseload generation, such as coal and
nuclear.
DOE appreciates the goal S. 1336 attempts to achieve.
Hydropower furthers goals of economic competitiveness and
electricity system reliability, and it appears this bill
incentivizes both hydropower generation and efficiency
upgrades.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the original bill, as reported, are shown as follows (existing
law proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
ENERGY POLICY ACT OF 2005 (PUBLIC LAW 109-58)
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SEC. 242. HYDROELECTRIC PRODUCTION INCENTIVES.
(a) Incentive Payments.--For electric energy generated and
sold by a qualified hydroelectric facility during the incentive
period, the Secretary shall make, subject to the availability
of appropriations, incentive payments to the owner or operator
of such facility. The amount of such payment made to any such
owner or operator shall be as determined under subsection (e)
of this section. Payments under this section may only be made
upon receipt by the Secretary of an incentive payment
application which establishes that the applicant is eligible to
receive such payment and which satisfies such other
requirements as the Secretary deems necessary. Such application
shall be in such form, and shall be submitted at such time, as
the Secretary shall establish.
(b) Definitions.--For purposes of this section:
(1) Qualified hydroelectric facility.--The term
``qualified hydroelectric facility'' means a turbine or
other generating device owned or solely operated by a
non-Federal entity which generates hydroelectric energy
for sale and which is added to an existing dam or
conduit.
(2) Existing dam or conduit.--The term ``existing dam
or conduit'' means any dam or conduit the construction
of which was completed before the date of the enactment
of this section and which does not require any
construction or enlargement of impoundment or diversion
structures (other than repair or reconstruction) in
connection with the installation of a turbine or other
generating device.
(3) Conduit.--The term ``conduit'' has the same
meaning as when used in section 30(a)(2) of the Federal
Power Act (16 U.S.C. 823a(a)(2)).
The terms defined in this subsection shall apply without regard
to the hydroelectric kilowatt capacity of the facility
concerned, without regard to whether the facility uses a dam
owned by a governmental or nongovernmental entity, and without
regard to whether the facility begins operation on or after the
date of the enactment of this section.
(c) Eligibility Window.--Payments may be made under this
section only for electric energy generated from a qualified
hydroelectric facility which begins operation during the period
of [10] 20 fiscal years beginning with the first full fiscal
year occurring after the date of enactment of this subtitle.
(d) Incentive Period.--A qualified hydroelectric facility
may receive payments under this section for a period of 10
fiscal years (referred to in this section as the `incentive
period'). Such period shall begin with the fiscal year in which
electric energy generated from the facility is first eligible
for such payments.
(e) Amount of Payment.--
(1) In general.--Payments made by the Secretary under
this section to the owner or operator of a qualified
hydroelectric facility shall be based on the number of
kilowatt hours of hydroelectric energy generated by the
facility during the incentive period. For any such
facility, the amount of such payment shall be 1.8 cents
per kilowatt hour (adjusted as provided in paragraph
(2)), subject to the availability of appropriations
under subsection (g), except that no facility may
receive more than $750,000 in 1 calendar year.
(2) Adjustments.--The amount of the payment made to
any person under this section as provided in paragraph
(1) shall be adjusted for inflation for each fiscal
year beginning after calendar year 2005 in the same
manner as provided in the provisions of section
29(d)(2)(B) of the Internal Revenue Code of 1986,
except that in applying such provisions the calendar
year 2005 shall be substituted for calendar year 1979.
(f) Sunset.--No payment may be made under this section to
any qualified hydroelectric facility after the expiration of
the period of [20] 30 fiscal years beginning with the first
full fiscal year occurring after the date of enactment of this
subtitle, and no payment may be made under this section to any
such facility after a payment has been made with respect to
such facility for a period of 10 fiscal years.
(g) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary to carry out the purposes
of this section $10,000,000 for [each of the fiscal years 2006
through 2015] each of fiscal years 2018 through 2027.
SEC. 243. HYDROELECTRIC EFFICIENCY IMPROVEMENT.
(a) Incentive Payments.--The Secretary shall make incentive
payments to the owners or operators of hydroelectric facilities
at existing dams to be used to make capital improvements in the
facilities that are directly related to improving the
efficiency of such facilities by at least 3 percent.
(b) Limitations.--Incentive payments under this section
shall not exceed 10 percent of the costs of the capital
improvement concerned and not more than 1 payment may be made
with respect to improvements at a single facility. No payment
in excess of $750,000 may be made with respect to improvements
at a single facility.
(c) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section not more than
$10,000,000 for [each of the fiscal years 2006 through 2015]
each of fiscal years 2018 through 2027.
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[all]