Sections 242, 243, and 247 of the Energy Policy Act of 2005, 42 U.S.C. §§ 15881, 15882, 15883, respectively, contain the general guidelines under which the Department of Energy (DOE) awards incentives for the production, improvement, and maintenance of qualified hydroelectric facilities. Under Section 242, the Secretary of Energy (Secretary) is authorized to make incentive payments to owners or operators of qualified hydroelectric facilities for electric energy generated and sold. This amount is calculated based on the number of kilowatt hours of hydroelectric energy generated by the facility during the incentive period and may not exceed $1,000,000 in a calendar year. 

Under Section 243, owners or operators of hydroelectric facilities at existing dams may receive incentive payments to make capital improvements in the facilities that are directly related to improving the efficiency of such facilities by at least three percent. Qualified owners or operators may receive up to thirty percent of the costs of the capital improvement concerned, but this amount must not exceed $5,000,000 in a single year. 

Under Section 247, qualified hydroelectricity facility owners or operators that make certain capital contributions to maintain their facilities are eligible to receive incentive payments. To be eligible, the capital improvements made to the hydroelectricity facilities must be directly related to improving grid resiliency, improving dam safety to ensure acceptable performance under all loading conditions, or improving certain environmental conditions, such as the quality of the water retained or released by the hydroelectric facility. Qualified applicants are eligible to receive up to thirty percent of the costs of the applicable capital improvement, but this amount may not exceed $5,000,000 in a single year. 

DOE’s Grid Deployment Office (GDO) is responsible for issuing application guidance each year to describe the application process and information necessary for the Secretary to make incentive payments under these statutes. After an application is submitted, DOE first considers the completeness of the application materials and requests any supplementary information from the hydroelectricity facility owner or operator if necessary. If DOE is satisfied that an application is complete, it then reviews the application for eligibility consistent with the GDO’s guidelines. After a determination has been made, DOE issues a written notice to each applicant, stating whether the application was approved for an incentive payment. If the application was approved, the notice provides for the incentive payment amount and timing. 

Applicants may appeal agency determinations to the Office of Hearings and Appeals. Decisions of the Office of Hearings and Appeals constitute the agency’s final determinations on requests made under this statute.