Federal Energy Regulatory Commission: Charges for Hydropower Projects' Use of Federal Lands Need to Be Reassessed
GAO-03-383
Published: May 20, 2003. Publicly Released: May 20, 2003.
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Highlights
Hydropower projects generate power valued at billions of dollars. For projects located on federal lands, FERC is required to assess "reasonable annual charges" to use these lands. FERC agrees that fair market value is the most reasonable basis for assessing these charges. This report examines FERC's annual charge system and the extent to which it reflects the federal lands' contributions to hydropower. GAO described and assessed FERC's annual charge system, estimated the fair market value for the use of federal lands, and discussed the implications of higher charges on consumers and project owners.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Federal Energy Regulatory Commission | FERC should reasses its system of annual land use charges in light of the (1) information we are providing concerning the estimated value of the contribution that federal lands make to the production of hydropower, (2) trend toward the restructuring of the nation's electricity markets, and (3) flaws in its present system. Specifically, FERC should develop new strategies and options for assessing annual charges that are proportionate with the benefits conveyed to hydropower licensees. In conducting this reassessment, FERC should (1) determine methods for assessing or estimating the fair market value of federal lands used for hydropower purposes, and (2) determine methods for assessing annual charges, taking into account the federal land's fair market value as well as the competing goals of encouraging hydropower development and avoiding unreasonable increases in electricity rates to consumers. |
Closed – Not Implemented
FERC continues to believe that its current system for collecting annual charges for the use of federal land is reasonable. Therefore, they have no plans to develop new strategies and options for assessing federal land use charges.
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| Federal Energy Regulatory Commission | In the interim, while FERC is developing this strategy, FERC should improve its internal control systems to improve the management of its current systems for assessing annual charges through periodically verifying self-reported data on the amount of federal lands licensed hydropower projects use. |
Closed – Not Implemented
FERC believes that the current method of licensees self-reporting the federal acreage within FERC licensed hydropower projects (1) is consistent with federal internal control standards and (2) results in reasonably ensuring the validity of data on the amount of federal lands used within these projects. Accordingly, they do not plan on making any changes in this area.
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| Federal Energy Regulatory Commission | In the interim, while FERC is developing this strategy, FERC improve its internal control systems to resolve discrepancies among its multiple billing and land databases in order to ensure that each project is properly billed for the annual land use charges it owes the federal government. |
Closed – Implemented
FERC is currently resolving its problems of conflicting billing and federal land data by upgrading its Activity Tracking Management System (ATMS). The upgraded system, which is scheduled to be completed in July 2008, will allow for entering more types of data, segregate the data into more distinctive categories, and provide a capability for FERC to synchronize the federal land data with its Hydropower Annual Charges billing system (HACs). According to FERC, the upgrade in ATMS will provide better data reliability and ensure proper billing for hydropower projects that use federal lands. is in the first phase of a multi-year effort to develop a FERC-wide activity management system. As part of this, the system for calculating charges for occupancy of federal lands will be integrated with the systems that contain land data. As these systems are integrated and data fields are aligned with business processes, data integrity will improve and the potential for improper billing for federal lands will diminish.
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Topics
Federal propertyHydroelectric energyLand managementUser feesPublic landsWater powerFair market valueFederal landsDatabase management systemsReal property