This past Thursday, February 15, 2007, the Federal Energy Regulatory Commission issued this Notice of Proposed Rulemaking on the Preliminary Permitting Process for wave, current and new technologies. As I'll discuss in a little more detail, FERC's order will continue to grant preliminary permits that comply with existing regulations. However, to avoid site banking, FERC will monitor progress under the permits more closely, require an applicant to file a Notice of Intent to file a license application within a year, and may cancel the permit where progress towards a license application is not evident. In addition, FERC also applied its new proposed policy in issuing this Order Granting A Preliminary Permit for the Reedsport Project off the coast of Oregon to Ocean Power Technologies. Though FERC's action is a good first step, its order bypasses the thorniest of the questions with respect to the preliminary permit process: how to decide between competing applications to begin with.
If you're interested in learning more about the deficiencies in FERC's existing preliminary permit program, take a look at the twenty page policy paper that I drafted for the Ocean Renewable Energy Coalition. Essentially, the purpose of the preliminary permit is to enable an applicant to study a site and retain priority to file for a license application. Problem is that FERC's thresh hold for issuing permits is fairly low, there's no fee for filing a preliminary permit, applicants are not required to provide extensive information and generally, FERC chooses the applicant with the first filed application (with the exception of municipalities, which get priority over private developers by statute). But since the permit holder also has priority rights to apply for a longer term license to construct the project, FERC's existing policy essentially means that the entity that is able to file for a site quickest will prevail at licensing, even if the technology or company may not be optimal for the site.
Right now, several sites are tied up as the result of competition between two or more applicants. And as the industry grows, competition will only stiffen. FERC addressed the easy cases in its order, i.e., what to do to ensure that a single permit holder does not tie up a site. But it has yet to provide guidance on how to allocate sites to begin with. And it's that second issue that has the potential to impact the emergence of wave and tidal technology within the United States.
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