To encourage the development of hydroelectric projects, and for other purposes.

March 18, 2003

Mr. SHADEGG introduced the following bill; which was referred to the Committee on Energy and Commerce

To encourage the development of hydroelectric projects, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. FINDINGS.

The Congress finds that:

(1) The United States must increase its supply of energy to ensure a continuing prosperous economy and high standard of life.

(2) We currently rely heavily on imports of energy supplies from foreign nations and utilize large quantities of carbon fuels for electricity generation.

(3) Hydropower is a domestic energy source which currently produces 92,000 megawatts of electricity per year, a figure representing 10 percent of the generation capacity in the United States.

(4) The Energy Information Agency estimates that, of the 75,000 dams in the United States, only 2,400 or three percent of these dams currently produce electricity.

(5) The Energy Information Agency further estimates that there are approximately 21,300 megawatts of undeveloped capacity at existing dams.

(6) New technology allows this energy to be utilized with little or no environmental effect by adding new turbines to existing dams and improving the efficiency of existing turbines.

(7) Hydropower produces electricity without producing hazardous waste or air pollutants.

(8) The 92,000 megawatts of electricity currently generated by hydropower avoid the annual emission of 4.75 million tons of sulfur dioxide and 2 million tons of nitrous oxide by eliminating the need to burn 345 million tons of coal.

(9) Hydropower is a renewable energy source which, because of the natural hydrologic cycle, will continue to be available in perpetuity.

SEC. 2. CONSTITUTIONAL AUTHORITY.

The Constitutional authority on which this Act rests is the power of Congress to make all laws which shall be necessary and proper as enumerated in Article I, Section 8 of the United States Constitution.

SEC. 3. HYDROELECTRIC PRODUCTION INCENTIVES.

(a) INCENTIVE PAYMENTS- For electric energy generated and sold by a qualified hydroelectric facility during the incentive period, the Secretary of Energy (referred to in this section as 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.

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 fiscal years beginning with the first full fiscal year occurring after the date of enactment of this Act.

(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 1.5 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 $1,000,000 in one 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 2003 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 2003 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 fiscal years beginning with the first full fiscal year occurring after the date of enactment of this Act, 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 $50,000,000 for each of the fiscal years 2004 through 2013.

SEC. 4. HYDROELECTRIC EFFICIENCY IMPROVEMENT.

(a) INCENTIVE PAYMENTS- The Secretary of Energy 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 one payment may be made with respect to improvements at a single facility. No payment in excess of $1,000,000 may be made with respect to improvements at a single facility.

(c) AUTHORIZATION- There is authorized to be appropriated to carry out this section not more than $50,000,000 in each fiscal year after the fiscal year 2003.

SEC. 5. SMALL HYDROELECTRIC POWER PROJECTS.

Section 408(a)(6) of the Public Utility Regulatory Policies Act of 1978 is amended by striking `April 20, 1977' and inserting `March 4, 2003'.

SEC. 6. INCREASED HYDROELECTRIC GENERATION AT EXISTING FEDERAL FACILITIES.

(a) IN GENERAL- The Secretary of Energy, in consultation with the Secretary of the Interior and Secretary of the Army, shall conduct studies of the cost-effective opportunities to increase hydropower generation at existing federally-owned or operated water regulation, storage, and conveyance facilities. Such studies shall be completed within two years after the date of enactment of this Act and transmitted to the Committee on Commerce of the House of Representatives and the Committee on Energy and Natural Resources of the Senate. An individual study shall be prepared for each of the Nation's principal river basins. Each such study shall identify and describe with specificity the following matters:

(1) Opportunities to improve the efficiency of hydropower generation at such facilities through, but not limited to, mechanical, structural, or operational changes.

(2) Opportunities to improve the efficiency of the use of water supplied or regulated by Federal projects where such improvement could, in the absence of legal or administrative constraints, make additional water supplies available for hydropower generation or reduce project energy use.

(3) Opportunities to create additional hydropower generating capacity at existing facilities through, but not limited to, the construction of additional generating facilities, the uprating of generators and turbines, and the construction of pumped storage facilities.

(4) Preliminary assessment of the costs and the economic and environmental consequences of such measures.

(b) PREVIOUS STUDIES- If studies of the type required by subsection (a) have been prepared by any agency of the United States and published within the five years prior to the date of enactment of this Act, the Secretary of Energy may choose not to perform new studies and incorporate the information in such studies into the studies required by subsection (a).

(c) AUTHORIZATION- There is authorized to be appropriated such sums as may be necessary to carry out the purposes of this section.

SEC. 7. RENEWABLE ENERGY PRODUCTION INCENTIVES PROGRAM.

Section 1212 of the Energy Policy Act of 1992 is amended in subsection (b) by inserting after `and which' the following `is a small hydroelectric power project (as defined in section 408(a)(1) of the Public Utility Regulatory Policies Act of 1978) or which'.

END