Middlebury hydro project stalls over water rights debate

MIDDLEBURY — The developers of a proposed small-scale hydroelectric operation at the base of the Otter Creek Falls in Middlebury have secured a federal OK to ramp up planning for the project, but that planning has apparently hit a snag at the local level.
The Holm family recently secured a preliminary permit from the Federal Energy Regulatory Commission (FERC) to gather more information in their bid to re-establish a hydroelectric power project near the Otter Creek Falls in downtown Middlebury. Specifically, the family wants to install a water turbine that would harness electricity from the creek as it flows through a flume under a building (owned by the Holms) that borders the south side of the falls.
Anders Holm said the project would produce 5 million kilowatt hours of electricity per year that would be marketed to area homes, businesses and the town of Middlebury.
With the FERC preliminary permit in hand, the Holms now have 36 months in which to put together a final application for the turbine project — which must also be endorsed by various state agencies, including the Vermont Public Service Board (PSB).
“We are now on (FERC’s) radar,” Anders Holm said on Thursday. “This makes us basically the developer of the project, which gives us the ability to do the further testing necessary to make sure this is done in a manner that FERC will accept.
“It is fantastic news,” he added.
Planning for the project has slowed to a trickle, however, as the Holms and town officials sort out who owns the water rights within the stretch of the Otter Creek being targeted for the water turbine.
Selectmen, through a Montpelier-based attorney, indicate the town is the substantial owner of those water rights — an asset they believe should be carefully considered before it is ceded to a hydroelectric project. The town owns much land bordering the creek near the falls and also owns land on which some of the hydro infrastructure would be built.
“We have looked extensively at what the rights of the town are in the overall picture, and according to the legal opinions that (attorney) Gerald Tarrant has produced for the town, the town has the lion’s share of the water rights asset, with a small portion accruing to the Holm property,” Middlebury selectboard Chairman John Tenny said.
The Holms believe — as owners of land bordering the creek — that they are co-owners of the water rights, an asset that would remain untapped if not for the project they are seeking to undertake.
Holm said the lingering water rights issue has delayed his family’s ability to apply for a certificate of public good from the PSB — a state permit needed to make the project a reality. That delay, Holm contended, has forced his family to decline the use of a $250,000 Vermont Clean Energy Development Fund (CEDF) that had been awarded to the project last May.
“Our getting the CEDF money was contingent on a certificate of public good, and that is contingent upon us coming to the state with a proposal … and we need the cooperation of the town to do that,” Holm said. “Our discussions with the town have participated more slowly than we had anticipated.
“The town’s role has not yet been defined,” Holm added, “and until that role is defined, we can’t go for a certificate of public good.”
Middlebury selectmen, meanwhile, stressed they are in favor of the concept of the hydroelectric project at the falls. But they also said they need more details about the Holm plan before giving away the town’s water rights — which could potentially have great value.
Tenny said other remaining unresolved issues, from the town’s perspective, include:
• How Middlebury can protect its other Otter Creek assets — namely, the public land it owns at the base of the falls that would be needed to host some of the hydro project infrastructure.
• Is the project itself feasible and can enough power be sold so that project can pay for itself?
• Will the project create undue noise and/or aesthetic issues at the Otter Creek Falls, one of the town’s most scenic draws?
“These are questions that haven’t been adequately addressed or answered,” Tenny said.
He noted the town and the Holms had been scheduled to meet in November to discuss the project. The Holms canceled that meeting, according to Tenny.
“Throughout this process, there has been spotty communication, I would call it, between the town and the Holm family,” Tenny said.
Holm said talks cannot proceed productively until a key issue is resolved.
“The spottiness (in communication) comes from our inability to move forward with discussions until they substantiate their claims of water rights,” Holm said.
He added his family is willing to compensate the town for partnering in the project. That compensation would come in the form of a percentage of each kilowatt hour of power sold, according to Holm.
Selectmen said they will again reach out to the Holm family for another private meeting to try and resolve their differences. They agreed that a hydroelectric project, if done carefully, would be good for Middlebury.
“This, to me, looks like a great opportunity,” said Selectman Dean George. “I’d hate to see us lose out on that opportunity.”
“I strongly support the concept,” Tenny said. “We have tried to work with this to move it forward, but we do not have a proposal to which we can respond.”

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