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Monday, January 28, 2013

Hydropower: Federal and Nonfederal Investment



Kelsi Bracmort
Specialist in Agricultural Conservation and Natural Resources Policy

Charles V. Stern
Specialist in Natural Resources Policy

Adam Vann
Legislative Attorney


The 112th Congress has examined numerous energy sources to determine their contribution to the nation’s energy portfolio and the federal role in supporting these sources. Hydropower, the use of flowing water to produce electricity, is one such source. Conventional hydropower accounted for approximately 8% of total U.S. net electricity generation in 2011. The use and support of hydropower is likely to remain an active issue area for the 113th Congress.

Hydropower has advantages and disadvantages as an energy source. Its advantages include its status as a continuous, or baseload, power source that releases minimal air pollutants during power generation relative to fossil fuels. Some of its disadvantages, depending on the type of hydropower plant, include high initial capital costs, ecosystem disruption, and reduced generation during low water years and seasons.

Hydropower project ownership can be categorized as federal or nonfederal. The bulk of federal projects are owned and managed by the Bureau of Reclamation and the U.S. Army Corps of Engineers. These projects are typically authorized and funded by Congress. Nonfederal projects are licensed and overseen by the Federal Energy Regulatory Commission (FERC).

Considered by many to be an established and renewable energy source, hydropower is not always discussed alongside clean or other renewable energy sources in the ongoing energy debate due to its potential environmental impacts. However, hydropower proponents argue that hydropower is cleaner than some conventional energy sources, and point to recent findings that additional hydropower capacity could help the United States reach proposed energy, economic, and environmental goals. Others argue that the expansion of hydropower in the form of numerous small hydropower projects could have environmental impacts and regulatory issues similar to those of existing large projects.

The 113
th Congress may face several issues as it addresses how hydropower fits into a changing energy and economic landscape. For example, existing large hydropower infrastructure is aging; many of the nation’s hydropower generators and dams are over 30 years old. Proposed options to address these concerns include increasing federal funding, utilizing alternative financing, privatizing federally owned dams, and encouraging additional small-capacity generators, among other options. Whether to significantly expand or encourage expansion of hydropower is likely to require congressional input due to the uncertainty surrounding the clean and renewable energy portfolio within power markets. Potential expansion of hydropower projects could take place by improving efficiency at existing projects or by building new projects, or both. Another important topic is the rate at which FERC issues licenses for nonfederal projects, which some find slower than ideal. Others defend the licensing process due to the environmental and other statutes with which agencies must comply. Other controversial issues related to hydropower in the current Congress include funding for potential changes to the rate structure of the Federal Power Marketing Administration (PMAs) and federal support for removal of hydroelectric dams. Legislation to address these issues was introduced in the 112th Congress in the House (H.R. 2842 and H.R. 6247) and the Senate (S. 629).


Date of Report: January 8, 2013
Number of Pages: 28
Order Number: R42579
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