Avista Corp. is looking at increasing the hydropower-generating capacity at its Nine Mile Falls Dam here, partly because of the U.S. government's recent extension of tax credits for development of renewable-energy generating facilities.

While an upgrade of the facility likely wouldn't be completed until 2012, the Spokane company has begun evaluating replacement of much of the generating equipment at the 101-year-old dam on the Spokane River northwest of Spokane, says Steve Wenke, the company's chief generation engineer.

The company says it generates an average of 15 megawatts of electricity on an annual basis at Nine Mile Falls.

"With the new equipment, it will be more," Wenke says. "How much more, I don't know. That's part of the work we're starting now."

The company has no cost estimate available on the project yet, and while it's difficult to put a cost per-megawatt on installation of new equipment at hydropower facilities, it's not uncommon for such projects to fall in a cost range of $2 million to $3 million per megawatt, Wenke says. The project isn't designed yet.

The dam has a rated capacity of 24.5 megawatts, but the generation equipment there is old, worn, not as efficient as it once was, and produces only as much as 18 megawatts of electricity at any one time, Wenke says. Avista says one megawatt of power is enough to serve about 750 homes on its system.

The dam has spaces for four generating units, although one of the units is out of service, Wenke says. One of the units produces four megawatts of electricity and two others each produce seven megawatts, he says.

While upgraded equipment would improve the efficiency of the hydropower generating units, improved design also would enhance their efficiency, Wenke says.

"Typically, to design and have manufactured the equipment, it takes 18 to 24 months," he says. Avista also would need to obtain permits, which would take some time, to do the work, he says. After the project, the 58-foot-high dam would look the same from the outside as it does now.

Avista lobbyist Collin Sprague says that increasing the output of a hydropower plant could help Avista meet requirements under state Initiative 937 to supply by 2012 at least 3 percent of its power from renewable energy sources built after 1999 as long as the upgrade doesn't require diversion of additional water. The 2006 voter-passed initiative also requires Washington utilities to meet 9 percent of their load from such renewable sources by 2016 and 15 percent of their load with such energy by 2020.

The federal economic stimulus legislation enacted by Congress last month extends through 2013 a production tax credit for hydropower systems that qualify. The legislation gives owners of hydropower generating facilities built by the end of 2013 a 1-cent credit against their federal income tax bill for every kilowatt-hour of electricity they generate in the first 10 years the plants operate. A kilowatt-hour is the amount of electricity consumed when 1,000 watts are used for one hour. Since generating plants produce kilowatt-hours of electricity by the thousands, the incentive could save hydropower generators big sums.

Avista has been making efficiency improvements at its six Spokane River hydropower plants for the last 20 years, Wenke says.

"The incentives do open up other projects," he says. "They do maybe accelerate them."

Nine Mile Falls has greater potential for increased generation than any of the other five plants, Wenke says.

"We'll look at Little Falls" Dam, located on the Spokane River 45 miles downstream from Spokane, he says. Yet, he adds, "There's not a lot of additional potential there."

Avista's predecessor, Washington Water Power Co., bought Nine Mile Falls Dam in 1925. Avista says the dam was built during the peak years of Spokane's "streetcar era" to supply power to the 130-mile-long electric railway system of the Spokane & Inland Empire Railroad Co. and was completed in 1908.

Between 1928 and 1930, Washington Water Power built a series of brick cottages just northwest of the dam to provide housing for its personnel, and both the plant and the cottages are listed on the National Register of Historic Places, Avista says. WWP added a new control room at Nine Mile Falls in 1993, replaced two of the four vintage turbines in 1994, and restored several of the historic cottages in 1996. Riverside State Park leases seven of the cottages at no cost for use by park rangers.