Most people know about the two big 19th century gold rushes: the one in California in 1849 and the one in Canada’s Yukon Territory in 1896. Some people have also heard of the Oklahoma Land Rush of 1889, when 50,000 homesteaders lined up their horses and wagons on a frontier starting line for a chance to claim a 160-acre parcel of undeveloped farmland. 

But few people know about the rush to stake claims on small hydroelectric sites that took place after Congress passed the Public Utilities Regulatory Policy Act of 1978 (PURPA). Writing in The New Yorker in February 1982, John McPhee called it “a generally invisible feverish rush for riches.” 

It was big enough for NRECA to have sent a memorandum to all 900 electric co-ops in October 1980, urging them to file a site permit application on any potential project in their service territory. “Don’t delay! You could end up buying the power from it from someone else at a higher rate.” 

Between January 1980 and June 1981, the Federal Energy Regulatory Commission (FERC) received 1,190 of these applications for projects of 25 MW or smaller, compared with 145 during the preceding five years. One Boston prospector alone was responsible for 82 applications in 23 states.

The CEO of a Virginia G&T heard the epithet “power pirate” for the first time when he was attending a conference in Springfield, Illinois, and received a phone call from his office informing him that a South Carolina energy company and its partners, two West Virginia towns, had filed permit applications on two sites the G&T was about to move on. 

“At just about any good site out there today, you’ll find someone else looking at it too,” an official at Pacific Northwest Generating Company (G&T) said at the time. 

PURPA guaranteed a market for power produced at small, independent power projects. Soon, 75 percent of FERC applications were coming from energy entrepreneurs. 

Another reason for the feverish interest was that a small hydro plant, especially one at an existing dam, could be brought on-line in half the time it took for a coal or nuclear plant. Then there was the 11 percent tax credit for small hydro investment Congress had attached to the Crude Oil Windfall Tax Act in 1980. 

Small hydro, unlike coal or nuclear, was the right scale for an individual power prospector. With nothing more than a tape measure and a free afternoon, he could begin investigating the feasibility of refurbishing an old dam and powerhouse. 

That’s exactly what Bob Carroll, general manager of Broad River Electric Cooperative in Gaffney, South Carolina, began doing on weekends and holidays soon after PURPA went into effect. From eight sites he investigated, the co-op chose a 10-foot-high diversion dam on the shallow, slow-moving river that is the co-op’s namesake, a dam that hadn’t been used to generate electricity in a decade. 

Broad River Electric won a $1 million demonstration grant from the U.S. Department of Energy and planned to rebuild the Cherokee Falls Dam and refit the powerhouse with an automated plant capable of generating 3.9 MW. To do so would cost $7 million, $5 million of which was expected to come from the Rural Electrification Administration. 

Typical of many abandoned dams in the eastern U.S., the Cherokee Falls Dam dates back to the early days of the Industrial Revolution, when it powered an iron works. By the 1880s, three water wheels supplied mechanical power for spindles and looms in a cotton mill. An electric generator replaced the water wheels in 1927, and three textile companies depended on it for the next 42 years. 

Carroll, an electrical engineer, was fascinated by the dam’s rich history and excited by the prospect of giving it a new life. 

“I love small hydro,” he said. “I feel about it like I do the windmills in Holland. … If I could just push everybody out of the way”—referring to the long, frustrating licensing process—“I could have that thing wired up and running tomorrow.” 

He was counting on the dam to produce wholesale power at 3 cents a kilowatt, 13 percent below the rate charged by Duke Power, the co-op’s main supplier. He expected that low price to hold steady at least through 1993, when Duke Power’s rate was projected to be 7 cents. 

“And that looks great!” he said.