Word of a federal government regulation carrying expensive consequences for the town came as a surprise to Cedaredge trustees on Sept. 3 during a preliminary work session on the town's 2016 budget.
The feds can assess fines of $12,000 per day if rules on how to deal with a piece of town property aren't followed to the letter, trustees learned.
Just dealing with decommissioning the town's long-defunct small hydropower generator will cost an estimated $40,000, the town administrator told trustees.
No fewer than four times during discussion of the issue trustees asked Town Administrator Katie Sickles for an explanation of how the federal government can levy huge fines on the town for dealing with its own equipment located on its own property? Four times Sickles answered that the Federal Energy Regulatory Commission (FERC) can levy $12,000-per-day fines on the town if it doesn't comply with regulations -- all the explanation that was needed.
The issue began some two decades ago when Cedaredge installed a small hydropower generator on the inflow to its water treatment plant. The unit produced significant, reliable power and surplus power that was sold, according to an individual familiar with the project. It operated for around eight years before falling into disuse and disrepair. The turbine was abandoned and has not generated electricity since 2002, according to a letter from FERC.
In April 2013, the facility was visited by an inspector from FERC. A letter informed town officials that, "Your project has been non-operational for 10 years, as such, you are in violation of Standard Article 1 and not in compliance with your exemption."
Over a year ago the town adopted a resolution disclaiming responsibilities regarding its FERC exemption. That wasn't good enough for FERC which isn't willing to let Cedaredge off the regulatory hook so easily.
According to town staff, it will require official authorization from FERC if the town wants to decommission its old hydro unit. That will require all applicable FERC regulations be followed and the site of the hydro project, including a usable building, be "returned to nature" at an estimated cost of $40,000.
Sickles told trustees the matter is now a legal issue, and the town's attorney will be consulted as the town resolves the matter with FERC.