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                                                 Calendar No. 184

116th Congress}                                          { Report
                                 SENATE
 1st Session  }                                          { 116-81

======================================================================
 
        RELIABLE INVESTMENT IN VITAL ENERGY REAUTHORIZATION ACT

                                _______
                                

               September 10, 2019.--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. 859]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 859) 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 
with an amendment in the nature of a substitute and recommends 
that the bill, as amended, do pass.
    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Reliable Investment in Vital Energy 
Reauthorization Act'' or the ``RIVER Act''.

SEC. 2. HYDROELECTRIC PRODUCTION INCENTIVES AND EFFICIENCY 
                    IMPROVEMENTS.

    (a) Hydroelectric Production Incentives.--Section 242 of the Energy 
Policy Act of 2005 (42 U.S.C. 15881) is amended--
          (1) in subsection (b), by striking paragraph (1) and 
        inserting the following:
          ``(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--
                  ``(A) that generates hydroelectric energy for sale; 
                and
                  ``(B)(i) that is added to an existing dam or conduit; 
                or
                          ``(ii)(I) that has a generating capacity of 
                        not more than 10 megawatts;
                          ``(II) for which the non-Federal entity has 
                        received a construction authorization from the 
                        Federal Energy Regulatory Commission, if 
                        applicable; and
                          ``(III) that is constructed in a region in 
                        which there is inadequate electric service, as 
                        determined by the Secretary.'';
          (2) in subsection (c), by striking ``10'' and inserting 
        ``22'';
          (3) in subsection (e)(2), by striking ``section 29(d)(2)(B)'' 
        and inserting ``section 45K(d)(2)(B)'';
          (4) in subsection (f), by striking ``20'' and inserting 
        ``32''; and
          (5) in subsection (g), by striking ``each of the fiscal years 
        2006 through 2015'' and inserting ``each of fiscal years 2019 
        through 2036''.
    (b) Hydroelectric Efficiency Improvement.--Section 243(c) of the 
Energy Policy Act of 2005 (42 U.S.C. 15882(c)) is amended by striking 
``each of the fiscal years 2006 through 2015'' and inserting ``each of 
fiscal years 2019 through 2036''.

                                Purpose

    The purpose of S. 859 is to amend the Energy Policy Act of 
2005 (EPAct 2005, Public Law 109-58) to reauthorize 
hydroelectric production incentives and hydroelectric 
efficiency improvement incentives.

                          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, the Hydropower Regulatory Efficiency Act of 2013 was 
enacted to streamline the development of small hydropower 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 non-powered dams. As 
outlined in its 2016 report, Hydropower Vision, the Department 
of Energy (DOE) found that hydropower in the United States 
could grow from 101 gigawatts (GW) of capacity to nearly 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 
DOE's testimony at the Subcommittee on Energy's 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. 859 reauthorizes both programs through fiscal 
year (FY) 2036. The bill also expands the definition of 
facilities eligible for hydroelectric production incentives to 
include small hydropower projects of not more than 10 MW which 
have received construction authorizations from the Federal 
Energy Regulatory Commission (FERC) and are located in regions 
with inadequate electric service.

                          Legislative History

    On March 25, 2019, Senator Gardner introduced S. 859. 
Companion legislation, H.R. 3361, was introduced by 
Representative McKinley on June 19, 2019, in the House of 
Representatives and referred to the Committee on Energy and 
Commerce.
    In the 115th Congress, Senator Gardner introduced similar 
legislation, S. 1336, on June 12, 2017. The Subcommittee on 
Energy conducted a hearing on S. 1336 on December 5, 2017 (S. 
Hrg. 115-493). Similar language was included in section 3010 of 
S. 1460, the Energy and Natural Resources Act of 2017 (Cal. 
162). The Committee on Energy and Natural Resources met in open 
business session on March 8, 2018, and ordered S. 1336 
favorably reported (S. Rept. 115-250). Companion legislation, 
H.R. 3256, was introduced by Representative McKinley 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 19, 2015. The Energy and Natural 
Resources Committee conducted a hearing on S. 1270 on May 19, 
2015 (S. Hrg. 114-118). 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 Senate Committee on Energy and Natural Resources met in 
open business session on July 16, 2019, and ordered S. 859 
favorably reported, as amended.

                        Committee Recommendation

    The Senate Committee on Energy and Natural Resources, in 
open business session on July 16, 2019, by a majority voice 
vote of a quorum present, recommends that the Senate pass S. 
859, if amended as described herein. Senator Lee asked to be 
recorded as voting no.

                          Committee Amendment

    During its consideration of S. 859, the Committee adopted 
an amendment in the nature of a substitute. The substitute 
amendment expands the definition of a ``qualified hydroelectric 
facility'' eligible for hydropower production incentives under 
section 242 of EPAct 2005 to include small hydropower 
facilities of not more than 10 MW which have received 
construction authorizations from FERC and are located in 
regions with inadequate electric service.

                      Section-by-Section Analysis


Section 1. Short title

    Section 1 sets forth the short title of the bill.

Sec. 2. Hydroelectric production incentives and efficiency improvements

    Section 2 reauthorizes through FY 2036 the incentives for 
hydroelectric production and hydroelectric efficiency 
improvements that were originally established in sections 242 
and 243 of EPAct 2005. This section also expands the definition 
of a ``qualified hydroelectric facility'' eligible for 
hydroelectric production incentives to include hydropower 
generation facilities owned by a non-Federal entity that are 10 
MW or less, authorized for construction by FERC, if applicable, 
and constructed in a region with inadequate electric service, 
as determined by the Secretary of Energy.

                   Cost and Budgetary Considerations

    The following estimate of the costs of this measure has 
been provided by the Congressional Budget Office:




    S. 859 would amend existing law regarding incentive 
payments made by the Department of Energy (DOE) to nonfederal 
owners or operators of certain hydroelectric facilities. DOE 
currently is authorized to provide two types of incentives to 
eligible projects: payments based on the amount of 
hydroelectricity generated by the facility and payments that 
defray some of the cost of measures that improve the efficiency 
of existing facilities. For 2019, the Congress has provided 
nearly $7 million for generation-based payments; no funding was 
provided for hydroelectricity efficiency payments.
    S. 859 would authorize the appropriation of $10 million 
annually over the 2019-2036 period for payments based on 
hydropower generation and another $10 million a year over that 
period for payments based on investments in hydropower 
efficiency measures. In addition, the bill would modify the 
deadlines and eligibility criteria for receiving such 
assistance.
    Based on historical spending for similar activities, and 
assuming the appropriation of the authorized amounts, CBO 
estimates that implementing S. 859 would cost $76 million over 
the 2020-2024 period and $176 million over the 2020-2029 
period. The costs of the legislation (detailed in Table 1) fall 
within budget function 270 (energy).

                                     TABLE 1.--ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER S. 859
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     By fiscal year, millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2019   2020   2021   2022   2023   2024   2025   2026   2027   2028   2029  2019-2024  2019-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hydropower Generation Incentives:
    Authorization....................................     10     10     10     10     10     10     10     10     10     10     10        60        110
    Estimated Outlays................................      0      1      9     10     10     10     10     10     10     10     10        40         90
Hydropower Efficiency Incentives:
    Authorization....................................     10     10     10     10     10     10     10     10     10     10     10        60        110
    Estimated Outlays................................      0      1      6     10     10     10     10     10     10     10     10        36         86
    Total Changes:
        Authorization................................      0     20     20     20     20     20     20     20     20     20     20       120        220
        Estimated Outlays............................      0      2     14     20     20     20     20     20     20     20     20        76        176
--------------------------------------------------------------------------------------------------------------------------------------------------------
Components may not sum due to rounding.

    The CBO staff contact for this estimate is Kathleen Gramp. 
The estimate was reviewed by Theresa A. Gullo, Assistant 
Director for Budget Analysis.

                      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. 859. 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. 859, as ordered reported.

                   Congressionally Directed Spending

    S. 859, 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 Energy at the 
December 5, 2017, hearing on S. 1336, similar legislation to S. 
859, follows:

  Testimony of Under Secretary Mark Menezes, U.S. Department of 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 
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, the 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

           *       *       *       *       *       *       *



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.]
          (1) Qualified hydroelecric facility.--The term 
        ``qualified hydroelectric facility'' means a turbine or 
        other generating device owned or solely operated by a 
        non-Federal entity--
                  (A) that generates hydroelectric energy for 
                sale; and
                  (B)(i) that is added to an existing dam or 
                conduit; or
                          (ii)(I) that has a generating 
                        capacity of not more than 10 megawatts;
                          (II) for which the non-Federal entity 
                        has received a construction 
                        authorization from the Federal Energy 
                        Regulatory Commission, if applicable; 
                        and
                          (III) that is constructed in a region 
                        in which there is inadequate electric 
                        service, as determined by the 
                        Secretary.
          (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 [10] 22 fiscal years beginning with the first full fiscal 
year occurring after the date of enactment of this subtitle.
    (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)] section 45K(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 [20] 32 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 [each of the fiscal years 2006 
through 2015] each of the fiscal years 2019 through 2036.

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 [each of the fiscal years 2006 through 2015] 
each of the fiscal years 2019 through 2036.

           *       *       *       *       *       *       *


                                  [all]