John K. Pollock ambled up a gravel path beside Rockfish River, a small green stream where white geese swam and fish jumped. He passed an old rock dam, crossed a low, freshly built bridge and soon reached the little powerhouse that may someday yield him a bonanza.
"I took a big gamble," said Pollock, 34, the boyish-looking new owner of this tiny, formerly abandoned hydroelectric plant hidden beneath the thickly wooded hills of Nelson County, which is situated about 120 miles southwest of Washington and known chiefly as the backdrop for "The Waltons" television melodrama. Yet if his luck holds, Pollock noted, he may eventually clear more than $100,000 a year in profits from his first hydropower venture.
"You really make good money after 10 years," he said.
Pollock, a former municipal water and sewer administrator, has joined a new breed of energy entrepreneurs who are scouring the waterways of Virginia, Maryland and other states from New England to the West Coast in search of old mills, untapped dams and defunct generating stations. Spurred by congressionally mandated financial incentives and special tax breaks, this growing band of developers hopes to cash in on what Pollock terms "the rebirth of small-scale hydro."
Small hydro, its advocates contend, is a benign source of cheap energy which may reduce America's reliance on costly imported oil and other controversial technologies, such as nuclear power. Hydro projects, they add, may also provide jobs in some economically depressed areas.
Nevertheless, the small-hydro business has already stirred protest from two disparate sectors -- environmental groups, worried about damage to American waterways, and the utility industry, which is troubled about inroads by private developers and irked at having to pay high prices to buy electricity from them.
"Wherever there's a waterfall, someone is sharpening his pencil to see if he can turn it into a gold mine," complains David Conrad, a water resources specialist for Friends of the Earth. "There are so many things that can go wrong when you treat a river like a giant plumbing system, particularly when you turn a river on and off like a faucet."
Environmentalists argue that the boom in tiny hydroelectric plants may jeopardize fish migration and other aquatic life, impede canoeing and other water sports, replace scenic rivers with mud flats and lead to installation of unsightly power transmission lines in wildlife areas. Even though many of the projects are too small to cause significant harm, environmentalists assert, the cumulative impact of a succession of little dams and diversion channels on a single river basin may be severe.
The electric power industry has focused its complaints partly on federal regulations that require utilities to buy electricity from small-hydro developers at steep costs, frequently tied to the price of oil or gas. The Edison Electric Institute, an industry group, has told Congress that the rules may provide "windfall profits" for developers while artificially inflating electric costs for consumers.
American Electric Power Co., a giant Ohio-based utility which serves parts of Virginia and six other states, recently won a U.S. Court of Appeals victory in a lawsuit challenging the price-setting regulations. The decision, however, may be appealed to the Supreme Court, and the regulations' outlook remains uncertain, partly because Congress is debating new rate legislation.
The two most controversial small-hydro proposals in Virginia are a Petersburg project on the scenic Appomattox River and a $34 million plan by Virginia Electric and Power Co. to rehabilitate an abandoned plant on the James River in downtown Richmond. Vepco officials are studying small-hydro projects as part of a search for untapped energy sources. Their moves also appear designed to prevent private developers from taking over abandoned Vepco plants, renovating them and then selling electricity to the Richmond-based utility at premium prices.
Pollock, who heads the two-year-old Virginia Hydropower Association, a 50-member group that may soon expand into Maryland and the District of Columbia, strolled about his renovated plant near Schuyler, a community about 20 miles south of Charlottesville, on a sweltering summer morning.
"Life is full of funny little things that happen to you," he said. Pollock first spotted the abandoned powerhouse while inspecting a nearby water tank when he was working as a Charlottesville water and sewer administrator. A few months later, in June 1980, he bought the plant. "My feeling was you're only young once. Might as well go for it."
So tiny is Pollock's plant that its output is measured in kilowatts -- thousandths of a megawatt. When it starts running, probably in the next few weeks, the plant will generate a maximum of 400 kilowatts. Pollock plans to produce another 800 kilowatts by erecting a second power station about 1 1/2 miles downstream. Pollock's two stations will provide enough electricity for a few hundred homes. Major utility plants, in contrast, generate hundreds, sometimes thousands, of megawatts of power.
Pollock pointed to his two freshly cleaned turbines. "It's taken a lot of work to fix it up," he said. When he bought the powerhouse from a Schuyler factory, the turbines were rusting and battered. The powerhouse itself had been heavily damaged by flooding during a 1969 hurricane. Sand and muck stood 20 feet deep before he dug it out. He excavated about 50,000 tons of sand from the plant's water channel, also dumped after Hurricane Camille, one of the greatest natural disasters in Virginia's history.
With a curved hand-held chisel, Pollock had carefully scraped debris from two old-fashioned Babbitt metal bearings, essential to the turbines. "Did it myself. Took about two days on each one," he said. First Pollock had to find a veteran craftsman who remembered how to clean the antiquated equipment. "It's an old art. They don't do it any more," Pollock said. "We've spun them and they spin beautifully."
Pollock views his Rockfish River venture as the start of a farflung enterprise, requiring multimillion dollar investments. The two plants here, he figured, will cost $750,000, financed mainly by bank loans. With his wife and three Richmond investors, Pollock has formed two companies already angling for seven other small-hydro projects from Charlottesville to Fredericksburg. The electricity will likely be sold to Vepco at prices the utility normally pays for oil or coal -- enough to bring sizable profits to Pollock's companies after bank loans are repaid, he said.
The small-hydro boom here and across the nation stems chiefly from a provision of the 1978 Public Utility Regulatory Policies Act, a part of the Carter administration's much-debated energy package. The provision encouraged small-hydro projects by guaranteeing developers a market for their electricity. Utilities were required to purchase this privately generated electricity at premium prices.
Tax breaks added impetus. A 1980 congressional measure increased tax credits available for small-hydro developers to 21 percent, by offering a new 11 percent energy credit on top of an existing 10 percent investment credit. Last year, Reagan administration tax legislation provided a further inducement by allowing accelerated depreciation writeoffs.
While the wave of small-hydro projects first gained headway amid considerable controversy in New England and on the Pacific Coast, it has now spread through Virginia and other Mid-Atlantic states.
A government-financed survey of dams in Virginia found 119 sites possibly suitable for small-hydro plants. Virginia's first new small-hydro station went into operation last November at Woodstock on the Shenandoah River's North Fork. It was set up by Britt Gilbert, a former D.C. teacher and Metro machinery operator. Another 15 tiny plants are forecast to go on line in the state within the next three years.
Small hydro has stirred such concern that the University of Virginia arranged a meeting of more than 30 developers, environmentalists and government officials in Charlottesville last month to try to head off conflicts. "There will be a lot of activity here due to water sources in Virginia," Richard C. Collins, director of the university's Institute for Environmental Negotiation, told the conference, warning that environmental clashes are inevitable.
In Maryland, small-hydro development appears more limited, but government officials say at least seven projects have been proposed, including three at dams operated by the Washington Suburban Sanitary Commission in Prince George's and Howard counties. Even in the District, rival developers are competing for government approval to renovate one defunct plant -- a tiny generating station hidden beneath Key Bridge in Georgetown that would draw water from the C & O Canal. National Park Service officials have raised no objection to the plan.
Financially pressed municipal governments are also considering small-hydro ventures as sources of revenue. Among these are Manassas in Northern Virginia and Westernport, an economically depressed Western Maryland city. Fredericksburg is negotiating for as much as $150,000 annually by leasing facilities on the Rappahannock River to one of Pollock's hydro companies. Wayne Rogers, an Annapolis-based developer and former Naval Academy instructor, has suggested a hydropower deal with Fairfax City, which owns a water supply dam on Goose Creek in Loudoun County.
Vepco's downtown Richmond proposal, apparently the largest small-hydro project in Virginia, has prompted objections from environmentalists and boaters. Tim McDonald, who runs a white-water rafting business, fears Vepco's proposed plant might divert so much water from the James that boating might be wiped out. Richard D. Mattox Jr., executive director of the Conservation Council of Virginia Foundation, warned that the Vepco project may endanger herring, striped bass and other fish that migrate upstream.
"We would like to see Vepco can it," said Mattox.
The Appomattox River project, proposed by Josh Greenwood, a Stanford University-educated blacksmith who produces ornamental ironwork, was blocked at least temporarily by the General Assembly earlier this year. The Appomatox is a state-regulated scenic river, and Greenwood's plan was vehemently challenged by the Float Fishermen of Virginia, an influential canoeists' group that invites legislators on annual river outings. Greenwood is now banking on a compromise aimed at preserving the river's rapids while also permitting him to renovate a defunct plant.
"This fight is a massive misunderstanding," Greenwood said. "Everybody's for the idea of hydropower, really . . . We are the pioneers."