At Brighton Dam, 15 miles north of Washington, the waters of the Patuxent River drop 60 feet on their way from the mountains of Maryland to the taps and toilets of Montgomery and Prince Georges counties.

Billions of gallons of water a day pour down the Brighton spillway in a powerful cascade that one day could wash away part of the nation's energy problem.

The flowing waters of the Patuxent could yield more than $100,000 worth of electricity a year if a small hydroelectric power plant -- costing less than $1 million -- were built at Brighton Dam.

The Washington Suburban Sanitary Commission, which owns Brighton Dam, is studying construction of a hydroelectric plant there as part of a Department of Energy program that is promoting installation of new electric-generating facilities at thousands of small dams like Brighton across the nation.

Across the Potomac, the Fairfax County Water Authority already generates electricity with water that flows from the Occoquan Reservoir, and owners of small dams across the nation are studying hundreds of similar projects as America rediscovers water power.

At Fries, Va., Reigel Textile Corp. received a Department of Energy grant earlier this year to plan a new hydroelectric plant to power its factory with the waters of the New River.

The Turlock Irrigation District, near Modesto, Calif., is building what is expected to be the first of a dozen small hydroelectric plants powered by water flows into irrigation ditches.

At Paterson, N.J., where Alexander Hamilton first built a power plant to harness the Great Falls of the Passic River, the city government is planning to restore and reopen a water power project that was abandoned 20 years ago.

Advocates of alternate energy sources contend that water power is the answer to the first question that critics ask about solar energy: "What do you do when the sun doesn't shine?"

Harness the rain, they say, catch the rainwater behind dams and extract the kinetic energy it generates as it flows toward the sea -- where the sun will recycle it through evaporation to provide a never-ending source of power.

Yankee engineers have drawn power from the swift rivers of New England for more than 250 years, but until recently the nation was abandoning old water power plants much faster than it built new ones. Water wheels that once ground flour and spun looms became obsolete after electricity came in, and thousands of small hydroelectric plants were closed down in the 1960s and 1970s because it was cheaper to make electricity by burning $4-a-barrel oil.

Today water power produces about 12 percent of America's electricity, 270 billion kilowatt hours a year. Federal estimates are the hydroelectric power output could be doubled with ease, saving the nation 140 million barrels of oil a year.

Reaching that goal would require building several big, costly and controversial dams in the Far West, but millions of barrels of oil could be saved just by installing generators on existing dams or by putting back to work power plants that were retired when oil was cheap.

Instead of ordering the Army Corps of Engineers -- which supplies a third of the nation's hydroelectric power -- to build more Grand Coulees or Hoover Dams, hydropower advocates want to tap the potential of thousands of small dams like Brighton.

"Small hydro may not be the answer to the energy crisis," conceeded Georgiana Sheldon, a member of the Federal Energy Regulatory Commission, which regulates dams. "But I do think it can provide a lot of additional power in small ways that will be of important help, particularly in the Northeast."

Small dams are "an available source of energy that has not been fully exploited," said George S. McIsaac, the assistant secretary of Energy in charge of small dams, oil shale and other alternate energies. They offer "the potential to back out some of the imported petroleum that is now sapping our national strength." They are "reasonably economic, environmentally benign and directly applicable to power generation."

In the past year, the DOE has financed feasibility studies for reusing more than a hundred dam sites, has paid part of the cost of a handful of demonstration dam projects, and has started engineering research on updating the design of small power plants.

But development of small dams is hung up over problems ranging from fish ladders and environmental reviews to investment tax credits and wholesale electric rates.

As an alternative to oil, small dams also suffer from a lack of sex appeal (compared with solar energy or snyfuels), a shortage of congressional supporters, and considerable suspicion and jealousy among hydropower advocates. The Corps of Engineers and the Bureau of Reclamation, the federal government's leading dam builders, are regarded as the enemy by the conservation and preservation, small-is-beautiful, soft-technology people who are touting small-scale hydropower.

Legislation to promote water power is viewed suspiciously by some conservation groups because it would enlarge the definition of "small" dams and would expand the role of the Corps of Engineers. A bill introduced by Sen. Mike Gravel (R-Alaska) would permit the Corps to build dams costing up to $15 million without the project-by-project congressional approval now required for all Corps projects.

The Corps' chief engineer, Lt. Gen. J. W. Morris, said the Army has no interest in becoming a major builder of small dams, but has the potential to triple its production of hydroelectric power. The Corps of Engineers' 67 dams supplied the electricity consumed by nearly 10 million families last year, and another 29 dams are now under construction. The Corps figures its dams saved the nation from importing 5.6 billion gallons of oil.

Morris said the Corps plans to increase the generating capacity of many of its dams and could add power plants to dams that were built without them in the days when power was plentiful. Only one of the Corps' dozens of dams on the Mississippi River has a power plant, he noted.

The Bureau of Reclamation, the federal agency that is the nation's second largest producer of hydroelectric power, also is increasing the power output of its projects by modernizing its equipment.

"There are fears in Congress that small hydro could become a new pork barrel," said Sarah Glazer, who follows the issue for the Congressional Environmental Study Conference. She calls the debate over dams "a microcosm of the controversies that are raging on big energy projects."

Like advocates of synthetic fuels and solar energy, backers of small dams have their hands out for federal money, either directly or through tax breaks.

Although Congress has authorized spending up to $300 million to pay for small-dam projects, none of that money has been appropriated, and few hydropower advocates expect the government to begin providing cash for building small dams. Instead they are pushing for special investment tax credits for dams and dynamos.

At present, hydroelectric plants qualify for the same 10 percent investment tax credit as other industrial facilities -- the builder can reduce his tax bill by 10 percent of the plant's cost. Advocates of small dams argue that, at the very least, their projects should be eligible for the additional 10 percent investment tax credit given other alternate energy investments, including solar and synthetic fuel projects. Congress knocked dams from the alternate-energy tax credits list a year ago.

The Senate Finance Committee recently agreed to increase the investment credit for hydro plants to 30 percent, using President Carter's windfall profits tax on the oil industry to make up for the loss of revenues. But after realizing it had given away more money than the windfall tax will bring in, the Finance Committee is backing off, and the dam tax credit is likely to be eliminated again. See DAMS, £3, Col. 1

Hydroelectric power industry spokesmen contend the faster tax writeoff is needed because of the high construction cost and long payback of dam projects. On a cost-per-kilowatt-of-power basis, hydroelectric plants cost several times as much to build as coal or oil-burning power plants and even are more expensive than nuclear power plants. Because of the heavy start-up costs, new hydro plants often operate at a loss for 5 years or more, and it can take 20 or 30 years to repay their construction bills.

Without tax incentives to make it attractive to invest in hydro plants, investors will put their money elsewhere and the nation will lose a valuable energy resource, water power advocates contend.

The dollars and sense of hydroelectric power are difficult to generalize about, say DOE economists. Only about half of the first 46 small hydro projects studied by the Energy Department turned out to be economically attractive.

All of those projects involved installing generators on existing dams, where the cost of acquiring land and building the dam -- the most expensive part of the project -- already had been paid. At present DOE funds can be spent only for adding electrical power plants to existing dams, but legislation being pushed by Sen. Henry Jackson (D-Wash.) would let the Energy Department investigate building new, small dams.

The critical cost factor that kills many small hydroelectric projects is today's high interest rates. With the interest costs on long-term borrowings running above 10 percent, owners of private dams rarely can finance new power plants profitably.

At Brighton Dam, "Tax-free money is what makes the whole thing possible," said Alan Will, the Washington Suburban Sanitary Commission engineer in charge of the power plant study. If the WSSC builds a power plant at Brighton, it will get the necessary $1 million by using its authority to issue tax-exempt bonds, Will explained.

The plant being considered at Brighton would have a rated capacity of 500 kilowatts of electricity. Hydroelectric plants producing as little as 100 kilowatts are economically feasible in some cases. At present, 15,000 kilowatts (15 megawatts) is the biggest hydroelectric plant that still qualifies for DOE's small-scale hydro project.

When Brighton dam was built in 1943, a tiny, 75-kilowat power plant was designed into the structure to provide enough power to run equipment and lights at the dam. But it was shut down a decade ago because maintaining the equipment cost as much as buying electricity from Baltimore Gas & Electric Co.

If the WSSC does decide to build a power plant, it probably will sell its output to BG & E, Will said. The utility has agreed to pay about 3.5 cents a kilowatt for the power, yielding about $100,000 a year in revenues to the WSSC. The 3.5-cent price is 90 percent of the wholesale rate that Baltimore Gas pays to buy electricity from other power companies.

The price at which power from a small hydroelectric plant can be sold is the other critical factor in the water power equation; that issue is being tackled now by the Federal Energy Regulatory Commission, which controls wholesale power prices and regulates all hydroelectric power.

Owners of small dams contend they ought to be paid the highest price that a power company must pay for additional electricity. Usually that is the price of electricity produced by the small diesel or gas turbine generators that are used only at peak demand times.

Power companies general argue that small hydroplants should be paid only the average price for power, and in some cases have refused to buy power from small dams. Only one state, New Hampshire, requires power companies to buy electricity from small hydroelectric plants.

FERC Commissioner Sheldon said her agency would prefer to leave the issue of small hydro rates in the hands of state officials rather than get involved in setting prices for thousands of small power plants.

To stimulate small hydropower development, the FERC in the last year has simplified its procedures for licensing projects, cutting the time necessary to get a permit from three years to less than one, Sheldon said.

Because most small-scale hydroelectric projects are planned at existing dams -- many of them 100 years old or older -- environmental impact usually isn't a problem. But in New England, where small-dam development is the most active, dam builders are fighting with environmentalists over fish ladders.

For nearly 20 years, the U.S. Fish and Wildlife service has been trying to bring back the Atlantic salmon by rebuilding the fishes' spawning grounds in New England rivers. Without fish ladders -- a series of ascending pools built around dams -- salmon and other migrating fish cannot return to their spawning sites and will not reproduce.

The federal government has built fish ladders around many abandoned dams, but the owner must pay for the fish ladder if the dam is refurbished and used for a power plant. Costing at least $5,000 for every foot the fish must climb, fish ladders can push the price of new power plants past the point of profitability, said Dr. Louis Klotz, a university of New Hampshire engineering professor who last week was named the first president of a newly organized industry group, the Small Hydro Association. CAPTION: Picture 1, Occoquan Reservoir and Dam with Fairfax County Water Authority power station, Photo by Larry Morris -- The Washington Post; Picture 2, Operator Wade Aylor inside the station. Photo by Larry Morris -- The Washington Post;Picture 3, Brighton Dam: a potential for $100,000 worth of electricity a year from the Patuxent's cascading waters. By Valerie Hodgson for The Washington Post