Hydropower Relicensing

About 10 percent of all electricity produced in the United States is generated by federal and nonfederal hydroelectric power (hydropower) projects. Almost half of the electricity generated by hydropower is produced by federally owned and operated projects, which include dams, reservoirs, stream diversion structures, powerhouses containing turbines driven by falling water, and transmission lines. The Federal Power Act authorizes the Federal Energy Regulatory Commission (FERC) to issue licenses to construct and operate nonfederally owned hydropower projects, including those on federal lands. In this report, GAO assesses one issue--the status of efforts to recover the costs incurred by federal agencies to administer the hydropower program. In essence, for fiscal years 1995 through 1998, federal agencies reported a total of about $32 million in hydropower program-related administrative costs. However, on the basis of its review, GAO estimated that for the 4 fiscal years, about $12 million in federal costs to administer the hydropower program either were not reported or might not be recovered because of appeals by licensees.

GAO noted that: (1) for fiscal years 1995 through 1998, federal agencies reported a total of about $32 million in hydropower-program-related administrative costs; (2) GAO estimates that for the 4 fiscal years, about $12 million in federal costs to administer the hydropower program either were not reported or may not be recovered because of appeals by licensees; (3) according to agency officials with whom GAO spoke and documents that GAO obtained, costs were not reported, in part, because some federal agencies that incurred costs to administer the hydropower program: (a) did not report any costs for any year to the Federal Energy Regulatory Commission; (b) reported costs in some years but not in other years; (c) did not report certain indirect costs (overhead), including unfunded future federal pension and postretirement health benefits and program-related legal costs; and (d) could not determine their costs; (4) in addition, GAO's analysis of the agencies' cost data showed that some of the $32 million in costs that were reported have been withdrawn or may be not recovered because they cannot be adequately supported; (5) GAO traced these problems to: (a) the Commission's failure to provide clear guidance to the other federal agencies about what costs are recoverable; and (b) the agencies' failure to improve their financial management and reporting systems to accurately account for the costs that they report; (6) agency officials expect the federal costs of administering the hydropower program to increase substantially as more and larger projects approach their dates for relicensing and as federal agencies take on additional responsibilities resulting from recent changes in the relicensing process; and (7) as a result, GAO estimates that tens of millions more dollars may not be recovered over the next decade unless corrective action is taken.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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