# What This Bill Does: Tax Credits for Upgrading Hydroelectric Dams

This bill creates a new tax credit that gives money back to companies and organizations that upgrade existing hydroelectric dams. Specifically, if you invest in improvements to a hydroelectric facility, you can get a tax credit worth 30 percent of what you spent. That means if you spend $1 million upgrading a dam, you get $300,000 back on your taxes. The credit applies to improvements made starting January 1, 2023, and companies have until the end of 2031 to get approval for their projects before they can claim the credit.

The bill covers a wide range of dam improvements, including adding fish passages to help fish migrate around dams, improving water quality, upgrading dams to meet safety standards, removing old dams that no longer serve a purpose, and improving public access to waterways. It also includes small remote hydroelectric dams that serve communities not connected to the major power grids. The idea is to encourage investment in making existing dams work better—producing more clean energy, making the power grid more reliable, and restoring river health and wildlife habitats.

The bill also allows certain organizations and companies to take this credit as a direct payment from the government rather than just reducing their taxes owed. This is particularly helpful for nonprofits and public utilities that might not owe enough in taxes to benefit from the full credit. Additionally, companies can transfer the credit to other parties, which creates flexibility in how the incentive gets used. Essentially, the government is using tax incentives to encourage upgrades at existing hydroelectric facilities rather than building new dams, which could help balance energy production with environmental restoration.

Maintaining and Enhancing Hydroelectricity and River Restoration Act of 2023

Smith, Adrian

Maintaining and Enhancing Hydroelectricity and River Restoration Act of 2023This bill establishes a new investment tax credit in the amount of 30% of the basis of any hydropower improvement property.The bill defines hydropower improvement property as property that<ul><li>adds or improves fish passage at a qualified dam;</li><li>maintains or improves the quality of the water retained or released by a qualified dam;</li><li>promotes downstream sediment transport and habitat maintenance;</li><li>upgrades, repairs, or reconstructs a qualified dam to meet safety and security standards;</li><li>improves public uses of, and access to, public waterways impacted by a qualified dam;</li><li>removes an obsolete river obstruction; or</li><li>places into service an approved remote dam.</li></ul>Further, written approval for hydropower improvement property must be obtained from the Federal Energy Regulatory Commission or state or local officials prior to January 1, 2032.The bill also allows an election to claim the investment tax credit for qualified progress expenses for some types of hydropower improvement property in advance of such property being placed into service. Any investment tax credit amount claimed for qualified progress expenses reduces the amount of the investment tax credit that may be claimed once the hydropower improvement property is placed into service.&nbsp;The bill authorizes certain entities, including tax-exempt and governmental entities, to treat the investment tax credit for hydropower improvement property as a payment of tax and receive a refund of any overpayment (also known as elective pay).&nbsp;Finally, the investment tax credit for hydropower improvement property may be transferred (i.e., sold).&nbsp;