City files Castle Creek hydro progress report with FERC

by Brent Gardner-Smith, Aspen Journalism
Paperwork makes clear that a power project is still under consideration

The city of Aspen has told the Federal Energy Regulatory Commission that it is making progress toward the preparation of a development application for the proposed Castle Creek hydroelectric plant.

In a required six-month progress report submitted March 11, the city told FERC it had conducted activities in three areas: conducting research on renewable energy; defending its water rights for the plant; and completing hydrologic and biological studies necessary to prepare a development application.

The city’s latest six-month progress report covers the time period from Sept. 1, 2013 to March 1, 2014.

“The Aspen city council has not abandoned the project,” the city’s report to FERC states. “The project remains a viable project at this juncture, one which the city continues to study and to defend the water rights upon which its plans are based.”

The progress report was required by FERC under the terms of the city’s current three-year “preliminary permit,” during which time the federal agency expects the city to be studying the feasibility of the project and preparing a development application.

“It is expected that during this permit term, agency consultation will be conducted and a development application will be prepared …  ,” the city’s preliminary permit from FERC states. “If the permittee fails to make significant progress toward developing a development application, the permit may be subject to cancellation.”

In its latest report, the city told FERC that since getting its second preliminary permit, “Aspen has undertaken numerous studies and activities in order to obtain the information necessary to file a permit application pursuant to this successive preliminary permit.”

A preliminary permit holds in place an applicant’s claim to a new hydro site and creates a deadline for them to file a development application. The city is currently working under its second three-year preliminary permit, which is set to expire in March 2015.

Counter to advisory vote?

In the November 2012 election, a majority Aspen voters answered an advisory question by telling the city to stop working on the hydro project.

The city asked “Shall the city complete the hydroelectric facility on Castle Creek, subject to local stream health monitoring and applicable government regulations to replace coal-fired generation with renewable energy?”

The final result was 1,956 voters answering “yes” and 2,063 answering “no” — a 51 percent “no” vote.

In its latest report to FERC, the city states that “Due to the election’s non-binding, advisory status, city council reserved the right to decide how to respond to this vote.”

In February the city council directed staff to have the city’s FERC attorney, Karl F. Kumli III of Dietze and Davis, P.C. in Boulder, file the required six-month progress report with the federal agency. It also approved $8,000 to cover the cost of preparing the progress report.

A city staff memo for the February meeting said that “staff’s continuing to maintain this permit via six-month filings merely maintains the current state of Castle Creek Energy Center — neither moving it forwards nor backwards.”

According to Celeste Miller, a spokesperson for FERC, “the commission has the ability to cancel a permit if an entity does not file progress reports.”

On March 11, the city filed its progress report and included 76 exhibits totaling 942 pages. The report was originally due March 1, but the city asked FERC for an extension.

The exhibits, available on FERC’s website, include documents from the lawsuit over the city’s water rights for hydro, reports from the city’s aquatic biologist and its hydraulic engineer, and documents related to the city’s work with the National Renewable Energy Laboratory on renewable energy options.

“It is unusual to receive such a large filing with exhibits,” said FERC’s Miller.

Will Dolan, the city’s utilities and communications specialist, said the city was advised by Kumli that this progress report was a good opportunity to add to the administrative record at FERC by filing the exhibits.

In its February memo, city staff said the progress report would serve “as our best opportunity to complete the FERC’s ‘administrative record’ of the project prior to permit reapplication or extension later this year.”

If the city is not ready to file a development application by March 2015, it could apply for a two-year extension on its current preliminary permit or apply for a third successive permit, FERC’s Miller said.

Poised to prepare

The progress report and exhibits show that city employees in the legal and utilities department are working to ensure that should the city council decide to file a development application for the hydro plant by the current deadline of March 2015, no gaps will exist in the planning process.

“If council does decide to move forward with the CCEC project, staff will have compiled much of the past studies, reports and other relevant information necessary to file a license application,” Dolan said in an email. “Throughout the duration of the preliminary permit process, staff have done their best to meet all requirements set forth by the FERC in order to preserve council’s decision-making authority on this matter.”

In regard to recent work done on studies of the hydro project, Dolan said the work completed since the November 2012 election was to finalize ongoing multi-year studies or to comply with a previously agreed-upon monitoring plan with Colorado Parks and Wildlife.

In the latest filing, the city told FERC that in January of 2013 its consulting hydrologists at Grand River Consulting had “completed the final assessment of project operation, stream flow and power generation” for the hydro project.

Also in January 2013, the city’s stream ecologist, Bill Miller of Miller Ecological Consultants, Inc., “completed the ecological assessment of the chosen operational scenario for the Castle Creek hydroelectric project, affirming the environmental soundness of this approach with extensive habitat modeling and historical flow data.”

In May 2013, Miller completed a monitoring report on Castle and Maroon creeks.

In June, Miller’s monitoring report was submitted to Colorado Parks and Wildlife for review. In July, the state agency’s comments were incorporated by Miller into the city’s monitoring report.

The city also updated FERC on the status of a lawsuit in state water court, where plaintiffs are claiming the city has abandoned its right to use water from Castle and Maroon creeks to make hydropower.

A three-week trial set for Oct. 28, 2013 was postponed until Sept. 11, 2014 so the city and the plaintiffs could work on a settlement.

The city told FERC in its progress report that during the stay in the trial, the parties agreed to work together to develop an additional study “to confirm appropriate bypass flows which will be maintained in Castle Creek and Maroon Creek when the city is operating the Castle Creek hydroelectric project.”

And it noted, that should it lose the case and “the challenged water rights were to be ruled abandoned by the water court, the operational protocols, engineering, and environmental analysis which have been performed by city of Aspen to date would require substantial revision.”

It further notes that “resolution of this case is necessary in order to finalize the project engineering and environmental analysis.”

The city said it “continues to vigorously defend its water rights” and that if the case is not settled, it will likely be appealed to the Colorado Supreme Court, which directly hears appeals from water court.

In regard to the study by the National Renewable Energy Laboratory, the city told FERC it “has continued to study the Castle Creek hydroelectric project, particularly within the framework of a renewable energy alternatives analysis being conducted by (NREL).”

The city expects NREL to present its initial report in April.

It also told the federal agency that “the city council will assess the outcome of the NREL alternatives analysis, and in the event the city council determines that the Castle Creek Energy Center project is a chosen alternative, the city will move forward as appropriate in accordance with applicable statues and regulations.”

Editor’s note: This story was done in collaboration with Aspen Journalism’s Water Desk, which is covering local and regional water and river issues. More at www.aspenjournalism.org.