79–010 

Calendar No. 417 

115TH CONGRESS REPORT " ! SENATE 2d Session 115–250 

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 nonpowered 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 

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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 

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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). 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2019– 

2023 

INCREASES IN SPENDING SUBJECT TO APPROPRIATION 

Authorization Level .............................................................................. 10 10 10 10 10 10 50 

Estimated Outlays ............................................................................... 0 4 9 10 10 10 43 

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. 

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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 

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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 ø10¿ 20 

fiscal years beginning with the first full fiscal year occurring after 

the date of enactment of this subtitle. 

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(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 

ø20¿ 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 øeach 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 øeach of the fiscal years 2006 through 2015¿ each of fiscal years 

2018 through 2027. 

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