Hydropower Expansion Qualifies for Federal Tax Credit

June 7, 2006

PacifiCorp's expansion of its J.C. Boyle hydropower facility on the Klamath River in Oregon is the first to qualify for a new federal tax credit, according to the Federal Energy Regulatory Commission (FERC). On one of its turbines at the facility, Pacificorp upgraded the runner—the part of the turbine that spins—and gained a 2.6 percent increase in efficiency. As a result, the facility is now producing an additional 8,343,000 kilowatt-hours of hydropower per year, which FERC has certified as eligible for a tax credit. The Energy Policy Act of 2005 aimed to encourage upgrades to existing hydropower facilities by allowing a tax credit for the incremental increase in power generation. The credit applies to upgrades placed in service between August 8th, 2005, and January 1st, 2008; the J.C. Boyle upgrade went online on November 8th, 2005. See the FERC press release and decision (PDF 16 KB). Download Adobe Reader.

PPL Corporation may soon follow suit. The company owns nine hydropower facilities on the Penobscot River in Maine, and has agreed to sell three of its dams in exchange for increased power production at three other dams. PPL will add "flashboards" on the top of the three dams, raising the water level by a foot and boosting their power production by about 10,000 megawatt-hours per year, an effort that should be eligible for the tax credit. Meanwhile, the Penobscot River Restoration Trust will have until June 2009 to buy the three other dams for $25 million. The trust members plan to remove two of the dams and bypass a third, improving access to 500 miles of river for the Atlantic salmon and 10 other native species of migratory fishes. See the PPL press release.