Hydropower Relicensing:

Federal Costs Are Not Being Recovered

RCED-00-107: Published: Jun 30, 2000. Publicly Released: Jun 30, 2000.

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Pursuant to a congressional request, GAO reviewed hydropower relicensing, focusing on the status of efforts to recover the costs incurred by federal agencies to administer the hydropower program.

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GAO's analysis of the agencies' cost data showed that some of the $32 million in costs that were reported have been withdrawn or may be not recovered because they cannot be adequately supported; (5) GAO traced these problems to: (a) the Commission's failure to provide clear guidance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.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matters for Congressional Consideration

    Matter: Should the Federal Energy Regulatory Commission not report adequate progress in developing the recommended guidance and federal agencies not report adequate progress in improving their financial management and reporting systems in their fiscal year 2002 budget submissions, Congress may wish to consider directing the Commission and the other agencies to accomplish the actions by a certain date.

    Status: Closed - Not Implemented

    Comments: Congress has declined to act on this matter.

    Matter: Congress may wish to consider whether to continue to fund the costs incurred by the federal agencies (other than the Federal Energy Regulatory Commission) to administer the hydropower program solely through the annual appropriations process or to allow them to retain licensees' reimbursements to offset some or all of these costs. In doing so, Congress would need to weigh any benefits that such a provision would provide against the loss of flexibility over the use of funds.

    Status: Closed - Not Implemented

    Comments: Congress has not enacted any changes that would permit federal agencies (other than FERC) to retain hydropower licensees' reimbursements to offset the costs of administering the hydropower program.

    Recommendations for Executive Action

    Recommendation: Because the federal government will likely be at risk of continuing to lose millions of dollars a year until guidance is issued on which other federal agencies' costs are eligible for recovery under the Federal Power Act, the Chairman and Members of the Federal Energy Regulatory Commission should issue guidance, developed in consultation with the Office of Management and Budget (OMB) and all affected federal agencies, that specifies what federal administrative costs are eligible for recovery under the Federal Power Act and how these costs are to be reported. This guidance should take into account OMB's Circular A-25-User Charges and Federal Financial Accounting Standard Number 4.

    Agency Affected: Federal Energy Regulatory Commission

    Status: Closed - Implemented

    Comments: FERC has issued guidance to other federal agencies on what federal administrative costs are eligible for recovery under the Federal Power Act.

    Recommendation: Because the federal government will likely be at risk of continuing to lose millions of dollars a year until guidance is issued on which other federal agencies' costs are eligible for recovery under the Federal Power Act, the Chairman and Members of the Federal Energy Regulatory Commission should report the Commission's progress in developing this guidance in the Commission's fiscal year 2002 budget submission to Congress in February 2001.

    Agency Affected: Federal Energy Regulatory Commission

    Status: Closed - Not Implemented

    Comments: Because of litigation between FERC licensee groups and FERC, the Commission has not commented in its budget submissions to the Congress on the guidance FERC has developed or the costs reported to FERC by other federal agencies.

    Recommendation: Because the federal government will likely be at risk of continuing to lose millions of dollars a year until guidance is issued on which other federal agencies' costs are eligible for recovery under the Federal Power Act, the Chairman and Members of the Federal Energy Regulatory Commission should report annually to the Appropriations Committees of Congress any failures by federal agencies to report costs in accordance with the Commission's guidance.

    Agency Affected: Federal Energy Regulatory Commission

    Status: Closed - Not Implemented

    Comments: Because of litigation between FERC licensee groups and FERC, the Commission has not commented in its budget submissions to the Congress on the guidance FERC has developed or the costs reported to FERC by other federal agencies.

    Recommendation: Because the federal government will likely also continue to be at risk of losing millions of dollars a year, the Secretaries of the Interior, Commerce, and Defense and the Chief of the Forest Service and the Administrator, Environmental Protection Agency (EPA), should ensure that their agencies' financial management and reporting systems are capable of producing accurate, timely, and reliable information on hydropower-program-related administrative costs eligible for recovery in accordance with the Federal Energy Regulatory Commission's prospective new guidance.

    Agency Affected: Department of Commerce

    Status: Closed - Not Implemented

    Comments: This recommendation cannot be implemented until FERC issues the needed guidance.

    Recommendation: Because the federal government will likely also continue to be at risk of losing millions of dollars a year, the Secretaries of the Interior, Commerce, and Defense and the Chief of the Forest Service and the Administrator, Environmental Protection Agency (EPA), should ensure that their agencies' financial management and reporting systems are capable of producing accurate, timely, and reliable information on hydropower-program-related administrative costs eligible for recovery in accordance with the Federal Energy Regulatory Commission's prospective new guidance.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: Since 2000, the Department of the Interior has a stronger and more accurate system for accounting for its hydropower related expenses. The cost data that Interior provides to FERC is consistent with federal accounting standards and is certified as accurate by DOI's Office of Financial Management.

    Recommendation: Because the federal government will likely also continue to be at risk of losing millions of dollars a year, the Secretaries of the Interior, Commerce, and Defense and the Chief of the Forest Service and the Administrator, Environmental Protection Agency (EPA), should ensure that their agencies' financial management and reporting systems are capable of producing accurate, timely, and reliable information on hydropower-program-related administrative costs eligible for recovery in accordance with the Federal Energy Regulatory Commission's prospective new guidance.

    Agency Affected: Congress

    Status: Closed - Not Implemented

    Comments: EPA cannot implement this recommendation because FERC has refused to issue the needed guidance.

    Recommendation: Because the federal government will likely also continue to be at risk of losing millions of dollars a year until the agencies produce accurate, timely, and reliable information on their hydropower-program-related administrative costs, the Secretaries of the Interior, Commerce, and Defense and the Chief of the Forest Service and the Administrator, EPA, should report their agencies' progress in improving their systems in their fiscal year 2002 budget submissions to Congress in February 2001.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Not Implemented

    Comments: No progress can be reported until FERC issues the needed guidance.

    Recommendation: Because the federal government will likely also continue to be at risk of losing millions of dollars a year until the agencies produce accurate, timely, and reliable information on their hydropower-program-related administrative costs, the Secretaries of the Interior, Commerce, and Defense and the Chief of the Forest Service and the Administrator, EPA, should report their agencies' progress in improving their systems in their fiscal year 2002 budget submissions to Congress in February 2001.

    Agency Affected: Federal Energy Regulatory Commission

    Status: Closed - Not Implemented

    Comments: According to the Forest Service, no progress can be made until FERC issues the necessary guidance.

    Recommendation: Because the federal government will likely also continue to be at risk of losing millions of dollars a year until the agencies produce accurate, timely, and reliable information on their hydropower-program-related administrative costs, the Secretaries of the Interior, Commerce, and Defense and the Chief of the Forest Service and the Administrator, EPA, should report their agencies' progress in improving their systems in their fiscal year 2002 budget submissions to Congress in February 2001.

    Agency Affected: Department of the Interior

    Status: Closed - Not Implemented

    Comments: No progress can be made until FERC issues the necessary guidance, which it has not yet done.

    Recommendation: Because the federal government will likely also continue to be at risk of losing millions of dollars a year until the agencies produce accurate, timely, and reliable information on their hydropower-program-related administrative costs, the Secretaries of the Interior, Commerce, and Defense and the Chief of the Forest Service and the Administrator, EPA, should report their agencies' progress in improving their systems in their fiscal year 2002 budget submissions to Congress in February 2001.

    Agency Affected: Department of Commerce

    Status: Closed - Not Implemented

    Comments: No progress can be reported because FERC has not issued the needed guidance.

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