Smithland hydro plant closer with energy bill

Smithland hydro plant closer with energy bill

Jun. 29--PADUCAH, Ky. --By Joe Walker, The Paducah Sun, Ky. Knight Ridder/Tribune Business News

Construction of a $150 million hydroelectric plant at Smithland Locks and Dam is a step closer with U.S. Senate passage of an energy bill containing tax credits for the project and others like it.

The bill passed Tuesday, 85-12, and was sent to conference to work out differences with the House. The House version excludes Senate language providing hydroelectric plant investors $9 in federal tax credits for each megawatt hour of electricity produced by a plant over a decade. A megawatt hour is enough to run about 1,000 homes for one hour.

Sen. Jim Bunning, R-Southgate, who added the credit provision via the Senate Finance Committee, said it will help with hydro plants near Smithland, Augusta and Hawesville. WV Hydro of Aikin, S.C., plans to build the plants and sell the power to Louisville Gas & Electric, parent firm of Kentucky Utilities. The plants would have a combined capacity of 240 megawatts.

WV Hydro President Jim Price expressed optimism about the bill's chances of passing Congress, even though Senate versions of energy legislation have not emerged from conference in recent years. The legislation is a strong marketing tool for investors because it could help reduce the cost of the Smithland project by at least 5 percent, he said.

"Depending on generation, we think it's going to amount to many millions of dollars over that 10-year period," Price said.

Unless the credits are extended, the Smithland plant must be finished by 2008 to take advantage of them, he said. The work would create about 100 construction jobs over two years with a total payroll of $10 million to $20 million. Highly automated, the plant would employ five or six people.

The Crittenden County seat of Marion would receive $15 million in royalties from hydro plant power sales over 50 years. When a permit application was filed in 1982, the U.S. Army Corps of Engineers required a government agency to be a co-licensee. Marion officials became a partner, but various factors -- notably the lack of tax credits -- have thwarted private investments.

Bunning said he wrote some provisions of the energy bill, which would provide nearly $7 billion for Department of Energy clean-coal initiatives to create Kentucky jobs and protect the environment.

"Americans desperately need a balanced, comprehensive energy policy," he said, "and I hope when House and Senate leaders meet in conference they can produce a final bill that will better utilize our domestic sources of energy and reduce our reliance on foreign nations."

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