151 FERC ¶ 61,115

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

18 CFR Part 11

[Docket No. RM15-18-000]

Commencement of Assessment of Annual Charges

(May 14, 2015)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes to 

revise its regulations regarding when the Commission will commence assessing annual 

charges to hydropower licensees and exemptees, other than state or municipal entities, 

with respect to licenses and exemptions authorizing unconstructed projects and new 

capacity. Specifically, the Commission proposes to commence assessing annual charges

two years from the effective date of the project license, exemption, or amendment

authorizing new capacity, rather than on the date that project construction starts. The 

proposed revisions will provide administrative efficiency and promote certainty among 

licensees, exemptees, and Commission staff as to when annual charges will commence.

DATES: Comments are due [Insert date sixty (60) days after publication in the 

FEDERAL REGISTER]. 

ADDRESSES: Comments, identified by docket number, may be filed in the following 

ways: 
Docket No. RM15-18-000 - 2 -

• Electronic filing through http://www.ferc.gov. Documents created electronically 

using word processing software should be filed in native applications or print-toPDF format, rather than in a scanned format.

• Mail/Hand Delivery. Those unable to file electronically may mail or hand-deliver 

comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE, Washington, DC 20426.

Instructions: For detailed instructions for submitting comments and additional 

information on the rulemaking process, see the Comment Procedures section of this 

document.

FOR FURTHER INFORMATION CONTACT:

Tara DiJohn (Legal Information) 

Office of the General Counsel

Federal Energy Regulatory Commission

888 First Street NE 

Washington, DC 20426

(202) 502-8671

tara.dijohn@ferc.gov

Norman Richardson (Technical Information) 

Office of the Executive Director

Federal Energy Regulatory Commission

888 First Street NE 

Washington, DC 20426

(202) 502-6219

norman.richardson@ferc.gov

SUPPLEMENTARY INFORMATION:
UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Commencement of Assessment of Annual Charges Docket No. RM15-18-000

NOTICE OF PROPOSED RULEMAKING

TABLE OF CONTENTS

 Paragraph Number

I. Background .................................................................................................................1.

II. Proposed Revisions.....................................................................................................8.

III. Regulatory Requirements..........................................................................................13.

A. Information Collection Statement ...................................................................13.

B. Environmental Analysis...................................................................................14.

C. Regulatory Flexibility Act ..............................................................................15.

D. Comment Procedures.......................................................................................20.

E. Document Availability.....................................................................................24.
151 FERC ¶ 61,115

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Commencement of Assessment of Annual Charges Docket No. RM15-18-000

NOTICE OF PROPOSED RULEMAKING

(May 14, 2015)

I. Background 

1. Section 10(e)(1) of the Federal Power Act (FPA),

1 and section 3401 of the 

Omnibus Budget Reconciliation Act of 1986,2 require the Federal Energy Regulatory 

Commission (Commission) to, among other things, collect annual charges from licensees 

in order to reimburse the United States for the costs of administering Part I of the FPA. 

The Commission assesses these annual charges against licensees and exemptees of 

projects with more than 1.5 megawatts (MW) of installed capacity under section 11.1 of 

its regulations.3

 

2. Currently, the Commission begins assessing these annual charges against licensees 

and exemptees with original licenses or exemptions authorizing unconstructed projects on 

 1 16 U.S.C. 803(e)(1) (2012). 

2 42 U.S.C. 7178 (2012). 

3 18 CFR 11.1 (2014).
Docket No. RM15-18-000 - 2 -

the date project construction starts.

4

 The Commission also begins assessing annual 

charges for new capacity, authorized by a relicense5 or an amendment of a license or 

exemption, on the date that the construction to enable such capacity starts.

6

 Because this

proposed rule affects only projects with respect to which annual charges are assessed

when project construction starts, we will not further discuss state or municipal projects,

projects that do not have installed capacity that exceeds 1.5 MW, or constructed projects 

without newly authorized capacity.

7

3. Recently, to determine when project construction starts for annual charges

purposes, the Commission has included language in its orders requiring the licensee or 

 4 Id. (c)(5).

5 We use the term “relicense” to refer to any new or subsequent license.

6 18 CFR 11.1(c)(5) (2014). We refer to the addition of capacity and a reduction 

of capacity (on occasion, capacity is reduced as a result of construction, in which case 

annual charges are lowered) as “new capacity.” 

7 Licensees or exemptees that are state or municipal entities are already not 

assessed annual charges until project operation commences. 18 CFR 11.1(d)(6) (2014). 

As noted above, the Commission does not assess annual charges with respect to projects 

with installed capacity of less than or equal to 1.5 MW. Licensees or exemptees of

constructed projects without new capacity are assessed annual charges immediately, 

because their entire capacity is already in place. See 18 CFR 11.1(c)(5) (2014). 
Docket No. RM15-18-000 - 3 -

exemptee to notify the Commission when project construction begins.8

 Otherwise, the 

Commission has to contact the licensee or exemptee to determine that date. 

4. Annual charges assessment should typically commence within two years of the 

effective date of the order issuing a license, exemption, or amendment adding capacity.

9

Original licenses and relicenses require a licensee to start construction no later than 

two years from the effective license date pursuant to section 13 of the FPA.

10 Similarly,

exemptions of unconstructed projects include standard exemption Article 3, which allows

the Commission to revoke an exemption if actual construction of the proposed generating 

facilities has not begun within two years.11 Amendments adding new capacity include an 

ordering paragraph that typically requires the licensee or exemptee to start construction 

within two years of the amendment’s issuance date.12

 8 See, e.g., Eagle Crest Energy Company, 147 FERC ¶ 61,220, at Article 207 

(2014) (requiring the licensee to notify the Commission of the date when it starts 

construction of the unconstructed project); Wisconsin Electric Power Co., 144 FERC 

¶ 62,268, at ordering para. (G) (2013) (requiring the licensee to notify the Commission of 

the date when it starts construction of the newly authorized capacity). 

9 Unless otherwise specified, orders are effective on the date of issuance. 18 CFR 

385.2007(c)(1) (2014). On occasion, a relicense is issued before the expiration of the 

prior license. In that circumstance, the effective date would not be the date of issuance 

and would instead be established in the order to coincide with the expiration of the prior 

license. 

10 See 16 U.S.C. 806 (2012).

11 18 CFR 4.94(c) (2014).

12 See, e.g., Northern States Power Co., 138 FERC ¶ 62,022, at ordering para. (E) 

(2012).
Docket No. RM15-18-000 - 4 -

5. In some cases, construction may not begin by the two-year deadline and therefore 

annual charges assessment may begin more than two years after the effective date 

(e.g., when a license’s start of construction deadline is extended by the Commission for 

an additional period of no more than two years as permitted by section 13 of the FPA).

13 

In rare cases, the Commission has granted requests for stay of a license’s start of 

construction deadline, or of an entire license, in certain narrowly circumscribed 

circumstances.14 On average, the Commission grants extensions and stays of a license’s 

start of construction deadline 3.4 and zero15 times per year, respectively. 

6. Similarly, exemptees may not begin construction by the deadline, and may request 

that the Commission extend the deadline to start construction. The Commission expects 

the prompt development of exemption projects and that exemption applicants will

anticipate and solve problems that affect construction either before or during the time that 

they seek their exemptions.

16 From 2010 through 2014, the Commission granted 

 13 16 U.S.C. 806 (2012).

14 Such circumstances may exist where there are preconditions to construction that 

are beyond a licensee’s control but will likely be resolved within a definitive period of 

time. See City of Broken Bow, Oklahoma, 142 FERC ¶ 61,118, at PP 8-9 (2013) (staying 

the start of construction deadline where City presented sufficient proof it would not be 

able to timely start project construction for reasons outside of its control).

15 From 2010 through 2014, the Commission granted three requests for stays of 

construction deadlines to municipal licensees with projects at U.S. Army Corps of 

Engineers’ dams.

16 Ralph and Raleigh Coppedge, 28 FERC ¶ 61,363, at 61,654 & n.11 (1984) 

(citing, FERC Stats. & Regs., Regulations Preambles 1977-1981 ¶ 30,204, at 31,368

(1980). Exemption from All or Part of Part I of the Federal Power Act of Small 

(continued ...)
Docket No. RM15-18-000 - 5 -

two extensions of start of construction deadlines, or on average 0.4 times per year, to 

exemptees. 

7. Licensees and exemptees can experience delays and may request an extension of 

an amendment order’s start of construction deadline as well. From 2010 through 2014, 

the Commission granted six initial extensions of a start of construction deadline, or an 

average of 1.2 extensions per year, to licensees granted amendments authorizing new 

capacity. 

II. Proposed Revisions

8. The Commission proposes to revise section 11.1(c)(5) of its regulations regarding 

when it will commence assessing annual charges with respect to hydropower licenses and 

exemptions authorizing unconstructed projects and new capacity. Specifically, the 

Commission proposes to commence assessing annual charges two years from the 

effective date of an order issuing a license, exemption, or an amendment authorizing 

additional capacity, rather than on the date project construction starts. 

9. The Commission anticipates the proposed rule will provide administrative 

efficiency and foster certainty among licensees, exemptees, and Commission staff as to

when annual charges will commence. Licensees and exemptees will no longer need to 

notify the Commission when project construction starts for the purpose of assessing 

annual charges and, in turn, the Commission will not have to contact the licensee or 

 

Hydroelectric Power Projects With an Installed Capacity of Five Megawatts or Less, 

Order No. 106.
Docket No. RM15-18-000 - 6 -

exemptee for this purpose. 

10. This proposed change, however, will affect those licensees and exemptees that do 

not start construction within two years. Annual charges will be assessed two years from 

the effective date of an order issuing a license, exemption, or an amendment authorizing 

additional capacity, regardless of whether the Commission has granted an extension of 

time for construction or a stay of the construction deadline.

17 As noted above, on 

average, 5 (3.4 licenses + 0.4 exemptions + 1.2 license amendments) affected projects 

each year receive extensions of the start of construction deadline, and zero receive a stay

of the start of construction deadline.

18 

11. In addition, licensees and exemptees that do not start construction by the deadline 

established in their license or exemption, or as extended by the Commission, will be 

affected. If a licensee fails to start construction within two years of its license’s effective 

date or as extended by the Commission, the Commission must terminate the license

pursuant to section 13 of the FPA.19 Similarly, as noted above, standard exemption 

Article 3 states that the Commission may revoke an exemption if the exemptee fails to 

start construction within the time prescribed by the Commission. From 2010 through 

2014, the Commission terminated one license, or an average of 0.2 licenses per year, and 

 17 Additionally, this proposed change may affect any licensees and exemptees that 

utilize a phase-in approach for adding capacity. 

18 Stays of entire licenses, however, will continue to stay the assessment of annual 

charges. 

19 16 U.S.C. 806 (2012).
Docket No. RM15-18-000 - 7 -

no exemptions. Therefore, we estimate that annually 0.2 licenses would have been 

assessed annual charges after the two-year deadline until their termination for failure to 

construct.

12. In sum, we anticipate that, on average, 5.2 (5 extensions + 0.2 terminations) 

licensees and/or exemptees per year will begin paying annual charges before starting 

construction or before the Commission terminates its license or revokes its exemption

under the proposed rule. 

III. Regulatory Requirements

A. Information Collection Statement

13. The Paperwork Reduction Act20 requires each federal agency to seek and obtain 

Office of Management and Budget (OMB) approval before undertaking a collection of 

information directed to ten or more persons or contained in a rule of general applicability. 

OMB regulations require approval of certain information collection requirements 

contemplated by proposed rules.21 The proposed revisions discussed above do not 

impose or alter existing reporting or recordkeeping requirements on applicable entities as 

defined by the Paperwork Reduction Act.22 Therefore, the Commission will submit this 

proposed rule to OMB for informational purposes only.

 20 44 U.S.C. 3501-3521 (2012).

21 See 5 CFR 1320.11 (2014).

22 44 U.S.C. 3502(2)-(3) (2012).
Docket No. RM15-18-000 - 8 -

B. Environmental Analysis

14. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment.23 Commission actions concerning annual charges are 

categorically exempt from this requirement.24 

C. Regulatory Flexibility Act 

15. The Regulatory Flexibility Act of 1980 (RFA)25 generally requires a description 

and analysis of proposed and final rules that will have significant economic impact on a 

substantial number of small entities. The RFA mandates consideration of regulatory 

alternatives that accomplish the stated objectives of a proposed rule and minimize any 

significant economic impact on a substantial number of small entities.26 

 23 Regulations Implementing the National Environmental Policy Act of 1969, 

Order No. 486, 52 FR 47,897 (Dec. 17, 1987), FERC Stats. & Regs., Regulations 

Preambles 1986-1990 ¶ 30,783 (1987).

24 See 18 CFR 380.4 (a)(11) (2014).

25 5 U.S.C. 601-612 (2012).

26 5 U.S.C. 603(c) (2012).
Docket No. RM15-18-000 - 9 -

16. The Small Business Administration’s (SBA) Office of Size Standards develops the 

numerical definition of a small business.27 The SBA revised its size standard for electric 

utilities (effective January 22, 2014) from a standard based on megawatt hours to a 

standard based on the number of employees, including affiliates.28 Under SBA’s current 

size standards, a hydroelectric generator is small if, including its affiliates, it employs 

500 or fewer people.29 The Commission, however, currently does not require 

information regarding the number of individuals employed by hydroelectric generators to 

administer Part I of the FPA, and therefore, is unable to estimate the number of small 

entities using the new SBA definitions. Regardless, the Commission anticipates that the 

proposed rule will affect few small hydroelectric generators. 

17. As noted earlier, the proposed rule will only affect non-state or municipal licensed

projects with an installed capacity exceeding 1.5 MW that are unconstructed or have 

newly authorized capacity. From 2010 through 2014, the Commission issued on average 

3.6 original licenses and 0.4 exemptions per year authorizing unconstructed projects to 

affected licensees and exemptees, and 1.6 relicenses and 5 license amendments per year 

authorizing new capacity. In sum, on average a total of 10.6 licensees and exemptees

may be affected by the proposed rule annually.

 27 13 CFR 121.101 (2014).

28 SBA Final Rule on “Small Business Size Standards: Utilities,” 78 FR 77,343 

(Dec. 23, 2013).

29 13 CFR 121.201, Sector 22, Utilities (2014).
Docket No. RM15-18-000 - 10 -

18. Of the 10.6 total entities, only those that do not start construction within two years, 

or receive a stay of their license, will be negatively affected by the acceleration of annual 

charges. As noted above, on average, 5.2 affected licensees and/or exemptees per year do 

not start construction within two years. Conversely, small entities that would otherwise 

start construction before the two year mark after their effective date will benefit from the 

proposed rule as it delays the commencement of their annual charges. 

19. Accordingly, pursuant to section 605(b) of the RFA, the Commission certifies that 

this proposed rule will not have a significant economic impact on a substantial number of 

small entities. 

D. Comment Procedures

20. The Commission invites interested persons to submit comments on the matters and 

issues proposed in this notice to be adopted, including any related matters or alternative 

proposals that commenters may wish to discuss. Comments are due [INSERT DATE 60 

days after publication in the FEDERAL REGISTER]. Comments must refer to 

Docket No. RM15-18-000, and must include the commenter’s name, the organization 

they represent, if applicable, and their address.

21. The Commission encourages comments to be filed electronically via the eFiling 

link on the Commission’s website at http://www.ferc.gov. The Commission accepts most 

standard word processing formats. Documents created electronically using word 

processing software should be filed in native applications or print-to-PDF format and not 

in a scanned format. Commenters filing electronically do not need to make a paper 

filing.
Docket No. RM15-18-000 - 11 -

22. Commenters that are not able to file comments electronically must send an 

original of their comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street NE, Washington, DC, 20426.

23. All comments will be placed in the Commission's public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 

below. Commenters on this proposal are not required to serve copies of their comments 

on other commenters.

E. Document Availability

24. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and print the contents 

of this document via the Internet through the Commission’s Home Page 

(http://www.ferc.gov) and in the Commission’s Public Reference Room during normal 

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A, 

Washington DC 20426.

25. From the Commission’s Home Page on the Internet, this information is available 

on eLibrary. The full text of this document is available on eLibrary in PDF and 

Microsoft Word format for viewing, printing, and downloading. To access this document 

in eLibrary, type the docket number excluding the last three digits of this document in the 

docket number field.

26. User assistance is available for eLibrary and the Commission’s website during 

normal business hours from the Commission’s Online Support at (202) 502-6652 (toll 

free at 1-866-208-3676) or email at ferconlinesupport@ferc.gov, or the Public Reference 
Docket No. RM15-18-000 - 12 -

Room at (202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room at 

public.referenceroom@ferc.gov. 

List of subjects in 18 CFR Part 11

Electric Power, Reporting and recordkeeping requirements.

By direction of the Commission.

Nathaniel J. Davis, Sr.,

Deputy Secretary.
Docket No. RM15-18-000 - 13 -

In consideration of the foregoing, the Commission proposes to amend Part 11, 

Chapter I, Title 18, Code of Federal Regulations, as follows: 

PART 11 – ANNUAL CHARGES UNDER PART I OF THE FEDERAL POWER 

ACT 

1. The authority citation for Part 11 continues to read as follows: 

Authority: 16 U.S.C. 792-828c; 42 U.S.C. 7101-7352. 

2. Revise § 11.1(c)(5) to read as follows: 

§ 11.1 Costs of administration.

* * * * *

(c) * * *

(5) For unconstructed projects, the assessments start two years after the effective 

date of the license or exemption. For constructed projects, the assessments start 

on the effective date of the license or exemption, except for any new capacity 

authorized therein. The assessments for new authorized capacity start two years 

after the effective date of the license, exemption, or amendment, authorizing such 

new capacity. In the event that assessment commences during a fiscal year, the 

charges will be prorated based on the date of commencement. 

* * * * *