U.S. Sen. Lisa Murkowski, R-Alaska, today welcomed the Federal Energy Regulatory Commission’s (FERC) proposal of a new method to calculate annual charges for hydropower projects on federal lands in Alaska. FERC is seeking comment on the use of a statewide average per-acre land value rather than a regional per-acre land value, which would reduce recent land use fee increases and help lower the cost of future projects.

“FERC’s proposal is a step in the right direction for Alaskans served by utilities that generate clean hydroelectric power from facilities on federal lands,” Murkowski said. “This new methodology recognizes the uniqueness of land valuation in Alaska, and will help ensure reasonable rates while removing a growing impediment to development in our state.”

The new proposal follows a concerted effort by Murkowski and Alaska entities responsible for paying the land use charges to persuade FERC to change its methodology. In early 2016, the current methodology resulted in an unjustified 71 percent increase in land use fees for hydroelectric projects on the Kenai Peninsula. It has resulted in a 384 percent increase in land use fees for those projects, and a 679 percent increase in land use fees for the Solomon Gulch project near Valdez, since 2008. Projects in the Fairbanks-Railbelt region have also been affected.  

Murkowski has repeatedly argued the current methodology violates the Federal Power Act, which requires fees for the use of federal lands for energy projects to be “reasonable.” She has encouraged FERC to base its rates on the statewide average of all land values in Alaska, given the size of the state and its lack of development.

The new proposal, if confirmed by FERC after a 60-day public comment period, will effectively roll back land use charges for most of the 21 hydro projects in Alaska that are located on federal lands, and reduce land use charges for 13 of 15 state utilities that operate hydro projects. According to one informal estimate, land use fees could initially drop by 25 percent.

Murkowski is the chairman of the Senate Committee on Energy and Natural Resources. FERC took action on this Alaska issue as one of its first orders of business since its quorum was reestablished last week. Murkowski shepherded the nominations of new FERC members Neil Chatterjee and Robert Powelson through Senate confirmation earlier this month.