Cities see a golden opportunity in revitalizing old dams

Just below Great Falls, where the Passaic River forms a thundering 77-foor cataract, stands a 67-year-old dam and its aging brick powerhouse -- the high-pitched whine of its electric generators long silenced.

Built in 1914 by the Paterson, N.J., Society for Establishing Useful Manufacturers, the facility was decommissioned in 1969 after a local utility calculated that it was cheaper to generate electricity using inexpensive imported oil.

Last week, after four years of state and federal bureaucratic hurdles, the Federal Energy Regulatory Commission (FERC) granted this old industrial city a license to reopen the facility.

Interest in the dormant hydro plant was stimulated in the late 1970s, when the price of imported oil soared. According to current plans, construction of the $10 million project --will begin in August. By 1984, officials estimate the 7.5 megawatt plant will generate 30 million kilowatt-hours of electricity a year --roughly the amount used by 6,000 homes.

But Paterson isn't alone. Hydroelectric experts inside and outside of government forecast a national resurgence for this energy source, which powered the early industrial development of the United States.

Applications for federal licenses to reactivate dams have increased tremendously, ac cording to FERC. Three years ago, the agency received about 10 applications a month for permits to begin the first stage of the licensing process. Now it receives about 150 applications a month, with 800 pending.

"The surge of interest in hydro has been likened to a gold rush," declares Fred Abrams, a hydroelectric power analyst with FERC. For communities such as Paterson, the "gold" they seek is the prospect of keeping a lid on local electricity rates as well as municipal taxes.

"What we're talking about here is not really innovative," says George Tuttle, the city's finance director and one of the architects of the Great Falls hydro plan. "We're saying it's an idea whose time has come again. We've already produced hydroelectric power in Paterson in the past. And what this does is create a long-term stream of income for the city."

The revenue he speaks of comes from the sale of the plant's electricity. A local utility has agreed to buy the dam's output for an estimated $2.1 million a year.

Financing has been offset, in part, by a $1.3 million grant from the US Department of Energy. Plans call for the sale of $9 million in tax-exempt bonds by the newly established Paterson Municipal Utilities Authority to pay the balance of the cost.

Under current federal regulations, municipalities are given preference in redeveloping hydro sites. Some 52 other cities, towns, and local agencies are awaiting final approval of their applications to the FERC. Some of the projects on the boards or in operation:

* Rollingsford, N. H., is seeking a federal license to reopen a small existing hydro dam on the Salmon Falls River, which stradles Strafford County, N. H., and York County, Maine.

* The Turlock Irrigation District in Turlock, Calif., recently has started operating a small hydro plant that will save the equivalent of 8,000 barrels of oil a year.

* The Connecticut Municipal Electric Energy Cooperative is participating in a feasibility study on hydroelectric power along the Enfield-Windsor Locks area of the Connecticut River.

Now, the Reagan administration has proposed legislation to expedite the often-torturous licensing process. The FERC would be able to automatically grant a license to previously operated hydro projects that have no more than a 15-megawatt capacity. The measure has wide bipartisan support, and most analysts say it will get the nod from Congress. Under the bill, such projects still will have to meet other current requirements to renovate or reconstruct a facility, including the formulation of an environmental impact statement. Current law exempts proposed hydro redevelopment projects of up to five megawatts from FERC licensing.

The American Public Power Association (APPA) also is helping to spearhead hydro redevelopment. The APPA represents more than 2,200 public utilities generating an estimated 14 percent of the nation's electricity.

Alan Richardson, APPA legislative director, says despite an increasing amount of private-sector "speculation" on the small-scale hydroelectric front, the "future is bright" for public, nonprofit facilities.

There are some 5,000 possible hydro sites around the US, according to analysts. While many are deactivated hydroelectric dams, others are dams that never had generators harnessed to them.

Mr. Richardson says studies show that 3,000 megawatts of hydroelectric power --roughly equal to the generating capacity of three nuclear power plants -- could be tapped economically and with little impact on the environment from existing US Army Corps of Engineers dams in Wisconsin, Michigan, Illinois, Indiana, Ohio, Minnesota, Iowa, West Virginia, and Pennsylvania.

Early next month the Great Lakes Electricity Consumers Association will meet with representatives of dozens of public utilities in the Midwest to discuss formulating regional plans for hydro power, perhaps along the lines of the Tennessee Valley Authority (TVA). The Midwest and the East are the only regions of the nation without a federally coordinated hydroelectric system.

There are proposed projects, such as the Dickey-Lincoln Dam in northern Maine , that promise abundant, inexpensive energy -- but at a tremendous cost to the environment. In the case of Dickey-Lincoln, a sizable stretch of the pristine St. John River would have to be flooded to create a reservoir large enough to make the proposal economically feasible. A final study on this project is due later this year.