On November 20, 2014, the Governing Board of the Low Impact Hydropower Institute (LIHI) adopted a revised fee structure to be applied to all existing and future certifications. This page explains those changes. The new fee structure became effective on January 1, 2015.
Motivation for Fee Changes
LIHI had not significantly altered the Certification Program fee structure since its inception in 1999, even though the program has expanded significantly. LIHI has issued 116 certificates since 1999, totaling close to 5.8 GW of installed capacity. Over the past two years, the Governing Board has studied the effectiveness of the fee structure and determined that it does not adequately recover the costs of our operating our certification program. This problem relates in part from the large number of small facilities that have applied for LIHI certification. Managing the program and providing services that enhance the value of the LIHI certificate requires a consistent and predictable revenue stream that can attract and maintain qualified professional staff and consistently return value to all stakeholders. Adequate revenue is necessary to improve value to LIHI certificate holders by working to expand the visibility and recognition of the LIHI brand and expanding the markets where the LIHI certificates are recognized.
The changes to the LIHI Certification Program fee structure are designed to allow LIHI to better serve our certification partners, to recover the costs of certifying hydropower facilities of all sizes and create more transparency between costs and fees, to engage in public discussion of the role of hydropower in renewable markets, and to move the Institute into a stronger, more sustainable financial position. The new fee structure is also designed to better align fees with the value that certified facilities realize when they participate in the renewable markets of today. The changes are sensitive to the challenges some certified facilities face in attempting to monetize the benefits of the LIHI certificate.
The process of revising the fee structure included outreach to a representative sampling of current LIHI certificate holders, as well as expertise and guidance provided by our Renewable Market and Hydropower Industry advisory panels. The outreach process began in the spring of 2014, and the revision underwent a series of modifications that were responsive to the suggestions offered from stakeholders.
LIHI Fee Structure Overview
The fees that LIHI charges to Certificate applicants and holders include fees associated with application review as well as annual fees to maintain an active LIHI certificate. There are three parts of the LIHI Application Process, each involving a separate fee component. Part 1 consists of an initial Intake Review, which allows the applicant to submit a questionnaire and receive a preliminary non-published review of the facility as well as a cost estimate to proceed with a formal LIHI application. Part 2 is the formal LIHI application, which is published for a 60-day public comment period. The date that a formal application is posted for public comment becomes the Certificate Effective date if the Certificate is issued. Part 3 is the review of an application for additional terms, referred to as Recertification. Typically, the term of a LIHI certificate is five years, although there are opportunities for longer terms under certain conditions. Approximately six months prior to the expiration of the term, the facility owner is invited to apply for Recertification.
Intake Review Fees
The fee for LIHI Intake Reviews will remain at the $950.00 without further change. There will be no charge for the modified intake review that will now take place in Recertifications.
Formal Application Review Fees
The fee charged for the full application for LIHI Certification will be calculated during the intake review process. The review fee is a combination of the Reviewer cost estimate plus LIHI overhead. There will no longer be consideration of Average Annual Generation (AAG) in the application fee; instead AAG is a component of the new Annual Fee.
Recertification Review Fees
All facilities seeking to renew their Low Impact Certification are subject to a Recertification review fee. As with changes to the Application Fee, there will be no longer be consideration of AAG in the recertification fee. The Recertification review fee includes an initial flat fee of $2,000 to cover the first phase of the Recertification application review. Because the LIHI criteria are changing in 2016, a second phase review will take place, as occurs now when there have been material changes. The result of the Phase I review will be an Intake review report on the initial recertification application, accompanied by an estimate of the incremental cost for completing the recertification application review, above the initial $2,000 fee. That incremental cost will be very site-specific, ranging from zero to several times the initial recertification fee. Depending on the completeness of the initial recertification application in the new format, the incremental review cost will vary. Until we get more experience with the new certification process, it will be difficult to estimate the full recertification cost.
Effective January 1, 2015, annual fees will be based on the average annual generation (AAG) of the certified facility multiplied by a $/MWh rate. LIHI will bill all certified facilities an annual fee for all years of the certificate term, including the year that a facility applies for re-certification.
The annual fee rate for each certified facility will vary according to the facility market-participation category. LIHI has created two market participation categories: Verified-Market Participants (VMP) and Base Fee. VMP facilities are those that are publicly listed as a supplier of eligible generation for a state Renewable Portfolio Standard (RPS) program, a Renewable Energy Standard (RES) program, or other similar policy which utilizes the LIHI Certification standard as part of compliance. In addition, LIHI certified facilities generating Green-e certified products will be included in the VMP category. All other certificates will be included in the Base Fee category.
Verified-Market Participants will be charged according to the following rate schedule:
Those generating power in NEPOOL = $0.10/MWh
Those generating power in PJM-GATS: $0.05/MWh
Those generating power in other regions: $0.03/MWh
Only the portion of generation that is certified will be charged at the VMP rates above.
The Base Fee category rate is $0.0175/MWh. It applies to all other LIHI certified projects and, in those instances where only a portion of the generation is eligible for market participation, to the balance of the generation that is not included in the VMP rate. To ensure fairness to certificate holders, additional parameters are included in the revised Annual Fee Structure, no certified project, regardless of its market category, will pay more than $30,000 in annual fees. Further, a minimum annual fee of $1,000 is established for projects with a nameplate capacity of 4.99 MW or less, and a minimum annual fee of $1,500 is established for projects with a nameplate capacity of 5 MW or more.
Active Condition Fee
Frequently, LIHI Certifications are issued with facility specific conditions, to which the Certified Project Owner must demonstrate compliance. A new fee for Active Condition Fee may be charged for each of these facility specific conditions at each anniversary date that the condition remains active. The purpose of this new fee is to recover the cost to LIHI associated with monitoring compliance with active conditions. The fee will range between $0 and $1,000 per condition per year, and will be assigned by LIHI according to the complexity of the condition and necessary follow up.
We welcome questions or comments on this new fee structure at any time. Visit our Contact Us page on our website for how to reach us.