Fees Are Again Part Of Shoreline Management Equation

By Kendra Bobowick

Lakes along the Housatonic River are again muddied waters, specifically those flowing through local hydroelectric plants.

The threat of annual fees for property owners along Lakes Lillinonah, Candlewood, and Zoar has reemerged in a narrative that started more than a year ago. The fees are included in a Shoreline Management Plan (SMP) that FirstLight Hydro Generating Company submitted to the federal commission that issues the company’s operating license.

The fees have literally been on again, then off again as arguments from residents in several towns along the lakes mounted against the SMP during its approval process with the federal commission.

Last summer the Federal Energy Regulatory Commission (FERC) had accepted the shoreline plan, fees included, which caused a spike in the discontent from residents, town officials, and even Attorney General Richard Blumenthal. Falling under the shadow of registration fees were docks, gazebos, sea walls, and other structures. Registration fees were another part of the initial proposal from the company that now owns the Shepaug and Steven Dam hydroelectric plants and lakes along the Housatonic River.

As the summer passed, the complaints from residents swelled and the attorney general spoke against fees, for one. FERC rescinded its decision. In a statement regarding the SMP in general, commission Chairman Joseph T. Kelleher offered a statement in late October that the record in the approval proceedings was not complete. Spokeswoman Celeste Miller had explained: “We anticipate asking for more information from FirstLight.”

Roughly one month later as 2008 arrived, FERC issued a notice stating, “The commission staff is providing an additional opportunity for public input into the pending proceedings…” The comment period open to the public and made public on the commission’s website had ended on January 17.

Fees Reemerge

Some of FirstLight’s responses to FERC’s search for “more information” as Ms Miller noted, broke the reprieve that residents had felt in late 2007. Sandy Hook resident Dan O’Donnell had said in December, “This ends a year of us fighting with them.” Is further struggle ahead?

Will fees be a part of the shoreline plan established to “provide for the maintenance of safe public access to the lake shorelines and riverfront lands and waters, as well as for the stewardship and development of shoreline/riverfront areas,” according to comments issued by FERC? Some of FirstLight’s written replies to FERC’s inquiries during its reassessment of the pending SMP raise concern. Both FirstLight’s and the public’s comments are posted on the federal commission’s website, Ferc.gov, under the eLibrary section, General Search heading. By entering the docket number P-2576, comments, including FirstLight’s lengthy letter, are listed.

 

Answering The Questions

In a cover letter with its responses dated January 18, 2008, FirstLight Power Resources Services, LLC, on behalf of FirstLight Hydro Generating Company, offers replies based upon, “The content of the SMP; information collected during the stakeholder process which aided the development of the SMP; and information obtained during recent preparation and planning for implementation of the SMP.” FirstLight had received a seven-day extension allowing them to file comments after January 17.

Proposed fees reappear in FirstLight’s closing paragraphs. The letter states: “The calculations and proposed fee amounts contained herein are estimates based on an ongoing review of available data and consideration of stakeholder input. At this point [FirstLight] is unable to determine…the actual costs of implementation or administration of the SMP. [FirstLight] strives to present meaningful responses that reflect its comprehensive review of available data but stresses that the proposed calculations are not definitive and are subject to change.”

Questions and answers follow the letter. FERC’s questions are italicized.

Your proposed fee structure includes both one-time and annual fees…please provide a detailed explanation of this fee structure.

FirstLight’s research, consultation, and review of other SMPs led the company to determine “the appropriate programs necessary to meet the goals of the SMP and developed cost estimates for the staffing, labor, materials and services required.” In its nearly two-page, single-spaced response, FirstLight cited “thorough analysis” of similar programs, “startup costs,” and “operational costs.”

The response continues, “Based on the estimate of the total program costs and the approximate number of adjacent landowners, [FirstLight] projected that the annual administrative fee for residential licenses would be approximately $200 per year and the annual administrative fee for community facilities would be approximately $100 per slip per year.” See a chart of these fee proposals in Appendix I at essexpartnership.com, with a link to the Housatonic River Project Shoreline Management Plan.

Again, to read FirstLight’s explanations and roughly ten-page response with accompanying charts and references, look at Ferc.gov, under the eLibrary section, General Search heading.

In another portion of its explanation for fees, FirstLight’s letter stressed the recovery of “SMP-related legal costs in the same manner as other licenses that are required by FERC to regulate the non-project use of lands within a project boundary…”

Still in response to the first question regarding fees, FirstLight continues, “In addition to annual fees, one-time fees for new structures and repairs or replacements of existing structures will also be charged to recover the costs of licensing new, non-project uses of project lands in the future.” If the SMP is approved with fee schedules intact, FirstLight explains, “[FirstLight] will schedule a six-month registration period to accommodate seasonal occupancy of adjacent landowners, during which time the $500 Existing Structure Registration Fee will be waived…the grace period is proposed to encourage adjacent landowners to promptly register their existing non-project uses and occupancies of project lands.”

Further explanation states, “The relevant estimated SMP costs are itemized by labor, overhead, and other costs for the first six years of the SMP.

Deeded Rights

“[FirstLight] is obligated under the Federal Power Act and terms of its new license to regulate the non-project use of property within the project boundaries to assure that the Housatonic Project is ‘best adapted to a comprehensive plan’ for a ‘variety of beneficial uses.’ Regulations provide that [FirstLight] may recover reasonable costs associated with the administration of such a regulatory program through fees. Such costs are incurred through the regulation of the actions of entities utilizing project lands and waters within the project boundary, regardless of whether deeded property rights exist for the particular structure or activity…as upheld by the Federal Court of Appeals, it is appropriate to recover such costs.”

Making an important clarification, the letter states: “Some adjacent landowners with deeded rights believe that the imposition of fees entails charging landowners twice for their deeded rights. This is not the case. [FirstLight] is not charging for a property right. Instead [FirstLight] is imposing an administrative fee that will enable it to perform a regulatory function as it pertains to how such deeded rights are exercised within the project boundary…”

What It All Means

FirstLight’s Vice President of External Affairs Jim Ginnetti explained the fees this week.

Assuming that the SMP is approved by FERC at some point, he said, “We would be looking to recover costs of SMP work,” he said. “We have to have everyone registered and we need to know uses — if a patio is on FirstLight land, for example, we have to work to register use, maintain a database, it’s those costs we’re trying to recover.”

In another section of its response, FirstLight talks about waiving the existing structure registration fee during a six-month grace period, intended to encourage prompt registration. Waiving fees is not contradictory to proposing fees, however. Mr Ginnetti explained, “There is a lot of other work besides establishing an initial database…” FirstLight will need to patrol its lakes and properties. Unlike Lake Zoar, where landowners own into the water, FirstLight owns the land up to a certain elevation around Lakes Lillinonah and Candlewood. “Maybe someone patrols the lake to assess any new uses, say a new patio,” he said. “Part of our work is to monitor land use and make sure people get proper approvals. A lot of work goes into administering the SMP.”

Is it fair to ask the landowner to pay fees for the SMP that FirstLight needs to satisfy the federal regulatory commission?

According to FERC, yes. Mr Ginnetti said, “FERC says we have to take steps to manage the shoreline. There are other SMPs where FERC has allowed a company to cover costs.” He stressed that FirstLight is not looking for a profit, but hoping to cover expenses. “FERC allows us to recover costs of work we have to do to protect the shoreline. FERC said we’re allowed to recover costs from the people who are using our land.” Essentially, the SMP is established to manage and protect the shore, he said.

Deeded rights are different scenarios. Explaining the deeded rights, Mr Ginnetti said that people purchase their property with the right to build a dock on the shore. Although the SMP does included fees for deeded rights, he said, “We’re not disputing rights to have a dock, people clearly have the right; the fee is for us to manage and inventory docks on our land.” With an example, he said, “The deed might be for a dock, but say someone tried to put in ten docks. We have to administer their right to have what they have, to manage how the deeded rights are exercised.”

According to Ms Miller with FERC, the Shoreline Management Plan is still pending. The federal commission will “look at all comments we receive,” she said.

One comment had been filed by Congressman Chris Murphy on January 17. He begins by applauding the federal commission’s decision in earlier months to rescind its order approving the shoreline plan “to govern the future use of the shoreline surrounding Candlewood Lake, Lake Lillinonah, Lake Zoar, Squantz Pond, and other waterways along the Housatonic River.”

Mr Murphy states: “A renewed view of the SMP, taking into account the concerns of homeowners and affected municipalities is warranted.” Later in his letter he writes, “I urge [FERC] to carefully examine all submitted comments…I believe a close examination of the record can result in only one outcome: a new SMP that addressed the following issues: the SMP must assure that property owners with deeded rights will not be charged initial or future fees…litigation costs borne by FirstLight cannot be passed on to property owners through fees, the SMP must include a process for the review or authorization of future fee increases,” among several other stipulations.