Document Type


Publication Date


Publication Citation

7 Energy Law Journal 373 (1986)


For more than a half-century, the Federal Energy Regulatory Commission (FERC or Commission) and its predecessor, the Federal Power Commission (FPC), regulated hydroelectric development of the nation's rivers under the Federal Power Act (FPA) with little interference by Congress.' However, increasing criticism of the FERC has reawakened congressional interest in hydropower regulation.2 Congress recently considered a number of proposals to amend the FPA.8 Of these, seven related directly to a controversy born in the 1970s between public and private power:4 the issue of preference in competitive FERC relicensing proceedings.

Section 7(a) of the Federal Power Act directs the FERC to give initial licensing preference to municipal and state project applicants;' however, the statute does not clearly specify whether the FERC must also apply the preference in its relicensing proceedings.6 Several Commission orders and court decisionssince 1978 have only added to the controversy, which intensifies as more licenses expire each year. Presently, the D.C. Circuit United States Court of Appeals is grappling with the issue in Clark-Cowlitz Joint Operating Agency v. FERC (Merwin Dam).

This article surveys circumstances leading to the public preference controversy, analyzes the D.C. Circuit's attempts to resolve the controversy in the Merwin Dam case, and examines legislative proposals to modify or eliminate the municipal preference. In the final analysis, the Merwin Dam case may prove most significant as a spur to congressional action against the municipal preference and in favor of a preference for existing licensees. Such a change would return stability to the hydropower market, potentially yielding net savings of up to 4.5 billion dollars per year for ratepayers.