Claremont Strikes Tax Deal With Likely Owner of Hydroelectric Plant

Claremont — The probable new owner of a dormant hydroelectric facility on the Sugar River off Lafayette Street said on Wednesday he hopes to have the plant producing power during the spring runoff next year, after the City Council approved a tax deal with Sugar River Hydro.

Following the council vote, Robert King, manager of Sugar River Hydro, said that he expects to execute a purchase and sales agreement on the property by Friday.

The 10-year “payment in lieu of tax” agreement means the hydro facility’s annual payment to the city will be based on a percentage of gross revenue, rather than the property’s assessed value.

Under its current assessment, the Lafayette Street facility would pay about $52,000 a year, but city officials believe that valuation is far higher than it should be because of the plant’s condition.

Under Wednesday night’s agreement, Sugar River Hydro will pay 2½ percent gross revenue for years 1-4; 3½ percent for years 5-8; and 5 percent for years 6-10.

The clock begins ticking on the agreement once King has the plant operating for 24 consecutive hours.

Councilor Nick Koloski asked if the 24-hour provisions could be used as a loophole to avoid paying anything to the city.

King and Finance Director Mary Walter said the 24-hour period was included to allow for testing repairs. If the plant ran for that long, it would indicate the repairs were working and it was ready to stay online.

“I wouldn’t be in the industry for 30 years if I turned off the plants every day,” said King, who is president of Ashuelot River Hydro in Keene, N.H.

After the council’s vote, King said he has a power purchase agreement to sell the power for 8 cents per kilowatt hour and it expires in eight years, so he wants to move quickly to repair the facility, which last operated in 2011.

The current owner had a similar tax agreement with the city but stopped operating the plant when the agreement expired.

Earlier this month, King told the council the plant is “a real mess.”

“There are two turbines and I have to send them to Canada to be remanufactured,” King said on Wednesday, adding that he has applied for a grant to help with the cost.

Except for Koloski’s question, councilors had no questions or objections to the proposal that was drafted in consultation with Walter and city attorney Jane Taylor. The approval was unanimous.

Patrick O’Grady can be reached at pogclmt@gmail.com.