Duke Energy

A Cooperative Basin-Wide Approach for Improving Water Management

Summary

Duke Energy began relicensing its Catawba-Wateree Hydroelectric Project on the heels of a four-year, record-setting drought that threatened the region’s electricity production and public water supply. One of the more challenging relicensing issues was that of future water supply for industrial, public water system, aquatic and recreation uses. With the growing demands on the water in the Catawba-Wateree reservoirs and the new awareness of the Project’s storage limits, the challenge became one of finding the operating scenario that would balance the competing resource interests.

Duke and other regional Stakeholders utilized the results of a Water Supply Study to develop a Low Inflow Protocol and a Drought Management Advisory Group (DMAG) to manage water use during periods of drought. They also formed a voluntary Water Management Group to oversee and fund tangible long-term projects to protect the water supply. These water management tools were included in a 70-party Comprehensive Relicensing Agreement (CRA) (filed with the FERC along with the New License Application on August 29, 2006) and are being implemented immediately and voluntarily, ahead of the requirements of the New License.

Duke Energy believes this process demonstrates an excellent use of technological tools and stakeholder collaboration during licensing. The resulting hydrological optimization with water management oversight is expected to significantly extend the use of the available water supply and enable more public and environmental benefits than could have been achieved otherwise.

Background

Duke’s Catawba-Wateree Project (NO. 2232) consists of 13 hydroelectric stations (831MW) located on 11 reservoirs on the Catawba and Wateree rivers in North and South Carolina. The Project spans over 225 river miles, has a total drainage area of 4,750 square miles, and encompasses approximately 1,795 miles of reservoir and island shoreline within nine counties in NC and five counties in SC.

Duke elected to use the FERC’s traditional licensing process and chose to significantly enhance this process with additional opportunities for stakeholder participation and collaboration. Stakeholders had a direct role in negotiating agreements that resolve issues and balance interests related to the Project’s future operation. As a result, a Comprehensive Relicensing Agreement (CRA) was developed by Duke and the Stakeholders. The 70-party CRA was signed on August 12, 2006 and submitted to the FERC along with the Application for New License on August 29, 2006.

Challenge

There is an intricate set of dependencies on the Catawba-Wateree River system, all hinging on the delicate balance of water use. The future depends on the balance and flexibility achieved in the New License for the Project. Accompanying the typical array of interests, Duke and other relicensing stakeholders quantitatively factored the following needs into their models, measures, and decision-making processes:

Energy – In addition to currently providing the energy to power 116,000 average-sized homes and water to support over 8,100 MW of fossil and nuclear-fueled power plants, the Catawba-Wateree River is a critical component in meeting future electric supply needs. The Licensee’s electric demand is expected to more than double over the next 50 years.

Drinking Water – The Catawba-Wateree provides a reliable drinking water supply for over 1.3 million people. Future public water supply needs are projected to increase over 200% in the next 50 years.

A drought of record that occurred from 1998 through 2002 made it obvious to the Stakeholders that the Project’s storage could be quickly taxed during dry periods and significantly larger minimum continuous flows into the Project’s riverine and bypassed reaches proposed for the New License would add considerable stress on the storage. The drought exposed a lack of needed coordination among the water withdrawers and determined that new water management measures needed to be implemented.

Innovation

Information and analysis related to current and future water storage demands was developed during the relicensing process. Specifically these include the Water Supply Study and the use of the CHEOPSTM Operations Model.

Water Supply Study – Guided by a broad-based stakeholder team, Duke conducted a Water Supply Study, the most comprehensive assessment of the 50-year future needs for water supply ever conducted for any North or South Carolina river basin. The study evaluated current water supply needs for the Project as well as provided a 50-year forecast (out to 2058) of water supply needs in the basin. One conclusion was the prediction that the region’s water supply demands would double more than over the term of the New License.

CHEOPST Operations Model – Working with a stakeholder team, Duke developed a customized application of the CHEOPSTM Operations Model that examined the complexities of operating the 11-reservoir system in conjunction with all the predicted storage demands for the next 50 years. The operations model was used to determine the operations scenario that would provide the best balance for all water uses. The inputs accounted for water supply projections, greater needs for flow releases from the reservoirs to support recreation and aquatic species downstream, new reservoir level requirements, current-day bathymetry of the reservoirs, and expected sedimentation over the next 50 years. The model analyzed integrated Project operations for various proposed operational alternatives and provided detailed Performance Measures that were used to determine whether flow and reservoir levels of any scenario would be adequate to support the interests of the various stakeholders (see the Performance Measures sheet provided in Section 5).

A Low Inflow Protocol has been developed to assess and manage drought conditions in the basin.

Low Inflow Protocol – Building on the Licensee’s experience with the droughts, stakeholders developed a Low Inflow Protocol (LIP) that provides trigger points and procedures for operating the Project and determining appropriate water withdrawal responses during periods of low inflow. The protocol’s basis is that all entities with interests in water usage will share the impacts of low inflow. Using the LIP also defines conditions for assessing the stages of a drought as it worsens and as the system recovers and provides the framework for basin-wide drought response on a level of coordination that is perhaps unmatched by any other FERC hydro project license. The LIP also calls for the development of the Catawba-Wateree Drought Management Advisory Group (DMAG) with 24 public water suppliers, Duke, and resource agencies to review the LIP implementation and recommend any needed revisions.

A Water Management Group has been created that will provide Duke and the water suppliers a mechanism for collaboration on future plans for the basin. This group will plan and fund projects that will improve storage management and water use.

Water Management Group – During the relicensing process, Duke proposed to collect water withdrawal fees under the Commission’s standard joint-use article. While it is common practice for owners of FERC-licensed reservoirs to require compensation for non-project water withdrawals, Duke had to this point, chosen not to require compensation. This became one of the most broadly contentious issues in the relicensing process. Duke’s original proposal was to use the fee collections to reinvest in improving the system storage. The water suppliers offered a counter proposal that would create a voluntary group of users that pay dues and identify and manage projects that help preserve, extend and enhance the capabilities of the reservoir system. The counter proposal was acceptable to the stakeholders and to Duke and the Water Management Group (WMG) was formed. Two important outcomes of these negotiations were that Duke will not charge withdrawal fees to members in good standing of the WMG for the term of the New License, and Duke will also pay dues to be a WMG member. The group will invest $550,000 per year in these improvement projects.

Results

Collaboration during this licensing process has led to the development of many improvements in the Project operations that will be implemented over the term of the New License. Included in this is the development of the LIP, DMAG and the WMG. These new collaborative efforts will allow the Project to sustain the expected growth in water demand for the Catawba – Wateree River Basin.

The stakeholders showed cooperation, inventiveness, originality and determination in developing a program to balance the competing resource interests in the Catawba-Wateree River Basin that will protect and extend the public water supply. Some of the activities that are currently underway include the following:

• Duke agreed to maintain the CHEOPST Operations Model and its inputs throughout the New License. It will be used by water suppliers and state agencies in evaluating future withdrawal requests. The first updates will occur in January 2007.
• The LIP drought monitoring procedures are in place and, during late 2006, indicated an early-stage drought condition. The condition calls for the immediate convening of the CW-DMAG to discuss coordination needs including voluntary water use restrictions. This meeting began an unprecedented regional cooperation on drought management.
• The LIP calls for Large Water Intake Owners (> 1 MGD) to update their drought response plans and ordinances to ensure compliance and consistency with the LIP by early 2007.
• The Water Management Group convened to establish its organization and assess potential projects. Already, it is working with the US Geological Survey to identify locations for and help fund the installation and O&M costs of 3 to 7 new groundwater monitoring wells recommended by the DMAG for assessing drought recovery.